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Let’s begin with an update on our year-to-date market conditions for 2019.
The average sales price for 2019 has gone up to $233,000; that’s a 16% increase from last year. Our absorption rate—the number of available homes—is the biggest challenge we have in our market right now. Active listings have gone up 10% since last year, which is a good thing to see, given that it’s only February. If that trend continues, homebuyers will have more options in the market this year than they did in 2018.
As I said before, our lack of inventory is the biggest challenge we’re facing in our market, and this is what The Washington Post article I recently read addresses—what’s the root cause of our dearth of inventory?
Entitled “Older Homeowners Are Preventing Millennials From Buying Houses,” the article tacks some of the blame for this issue on the older generation. According to a study by Freddie Mac, senior homeowners (baby boomers and war babies) are staying in their homes longer. The reason cited for this is something called “the lock-in effect.” These homeowners are in love with their current mortgage interest rates and are loathe to give them up in search of a new home.
Perhaps there are some other factors at play here. Maybe senior homeowners are living longer because they’re more healthy and they don’t want to go to an assisted living center. This would allow them to stay in their homes longer.
Other studies suggest that it’s not just the activities of older homeowners to blame for the housing shortage for millennials. Here are three I’ve come across in my research:
1. Student debt. There is $1.5 trillion in student loan debt in the US right now.
2. High rent. Increasing rents prevent millennials from saving up for a down payment on a home.
3. Millennials are having kids and getting married later. These life events are typical triggers for homebuyers, but since they’re happening later, it’s reflected in the market.
To learn more about this issue, you can read the full article here.
If you’re thinking of selling your home or would like more information about our current market conditions, you can always reach out to me. I’m here to help.