It's Getting Harder To Buy A First Home. That's A Problem For More Than Just Potential Homeowners
It’s spring, which means more house-for-sale signs are going up. And according to a report from the real estate website Trulia, homes in our region are inching out of reach of first-time buyers just as they are in crazy markets like Seattle and Austin.
Trulia looked at data since 2012.
“What we found is that a lot of the starter homes on the market tend to be older, they tend to be smaller, they tend to be more expensive, and uglier,” says David Weidner, who covered finance for the Wall Street Journal before joining Trulia’s Housing Economic Research team.
Yes, uglier. Weidner says it’s a rough translation from real estate lingo like “fixer-upper,” “contractor special” and “needs TLC.” In other words, homes that tend to have more problems.
Starter homes, usually defined as homes on the cheaper third of the spectrum, are also getting harder to find because there are fewer available. It also may be harder to get an affordable mortgage these days — the Federal Reserve just increased interest rates to the highest level in a decade.
“What we’re seeing right now is a boom-and-bust America, where some places have affordable housing, they don’t have the jobs. And some places have all the jobs, but not enough housing,” says Weidner.
Coastal cities like San Francisco, Seattle and Miami stand out for their pricing.
“But I would say relative to other markets in the Midwest and the South, western markets are a very close second to some of these crazy markets out on the coasts” he says.
Should such trends continue, they could impact everything from the wealth gap between generations to rates of homelessness and, as Michael Stoll, a professor of public policy and urban planning at the University of California, Los Angeles, puts it, “everything in between.”
Owning a home, rather than renting, allows people to accumulate wealth. With high prices and competition, it’s harder for first-time buyers (many of them millennials) to transition from renting to owning, which could, in turn, contribute to rising rent.
“That’s when you get the squeeze on the bottom,” says Stoll.
Meanwhile, he says, the rich get richer.
“It does exacerbate wealth inequality,” he says.
Beyond that, Stoll points to research indicating that homeowners are more likely to engage with their communities – whether it’s volunteering to voting -- regardless of factors like demographics, income or the relative price of their home. By extension, home ownership tends to make better neighborhoods.
The question now is: When will prices hit a ceiling? And when will baby boomers start to downsize and free up more homes?
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Boise State Public Radio in Idaho, Yellowstone Public Radio in Montana, KUER in Salt Lake City and KRCC and KUNC in Colorado.