(KTLA) – Demand and supply – this always explains why prices can be so high. The housing market is no exception.
Housing prices continued to rise in January as the inventory of affordable real estate fell to a record low, the National Association of Realtors said. The average house price across the country last month rose 15.4% to $ 350,300 from a year ago.
“The increase in prices indicates a market of sellers with a large number of willing buyers and a very limited supply,” said Lawrence Young, chief economist of the association.
At the end of January, the number of available homes fell to an all-time low of 860,000, the lowest level since 1999.
This means that while maintaining the current rate of sales, existing offers of houses will be exhausted in less than two months.
This is obviously great for sellers, but clearly grim news for buyers, especially first-time home buyers, trying to gain a foothold in an increasingly competitive market.
Currently, more real estate is available at the highest level of the economic spectrum, rather than in the pool, which is usually written by young home buyers. According to the Realtors Association, homes priced at $ 500,000 or less are disappearing rapidly, sparking wars over the relatively few options available. .
Meanwhile, interest rates are rising and ready to jump higher as the Federal Reserve prepares for a series of rate hikes aimed at curbing inflation.
This creates another problem. As young people exit the housing purchase market, they often have no choice but to remain tenants. This creates a completely different problem of supply and demand.
Greater demand for real estate rentals, especially in narrow markets, is pushing rents. Real estate firm Redfin says it rents in America’s 50 largest cities grew by 14% last year averaged up to $ 1877 per month.
“Rising mortgage costs are pushing more potential buyers to rent, which is boosting demand and rental prices,” said Daryl Fairweather, chief economist at Redfin.
“Raising the mortgage rate is accelerating, which will lead to an increase in both mortgage payments and rents in 2022,” he said.
Except for moving to a cheaper, less attractive area, there’s nothing you can do about it, at least until the housing market finally starts to cool down. At the same time, it’s just another expensive thing you can add to your growing list of expensive things.