After a decade of rising prices, the US property boom seems to be finally fizzling out because homes are too expensive for ordinary workers to buy.
Realtors report that homes that were snapped up within days by eager buyers are now languishing on the market for weeks or months.
Asking prices are also dropping significantly.
For example, a home in Seattle, Oregon, recently listed at $600,000 is now discounted by $50,000 – a massive 8.5% off the price before sales negotiations even start.
Years of rising prices now coupled with increasing mortgage interest rates are combining to make purchasing a home too expensive for many, say realtors.
No-go zones for buyers
Some metropolitan areas are no-go zones for many buyers – such as Seattle where housing stock is up 25% in a year; Portland, Oregon with stock up 32% and San Jose, California, where homes for sale are 12% up.
The latest official data shows sales fell dramatically in June, while homes available to buy increased as young professionals and families elect to stay in a rented home for longer.
An average home now costs $278,000.
The Federal Housing Finance Agency says home prices were up an average 6.4% in June, which is the lowest year-on-year increase since early in 2017.
But despite the worries in the market, house prices in the USA are still 13.5% below peak values last seen before the global financial crisis in 2006 in some states and metropolitan areas, says data monitor CoreLogic.
Affordability headache
Home prices in 39 states have now surpassed the 2006 peak figure, with Connecticut lagging the rest still 16% below the all-time high.
The firm forecasts a 5.1% year-on-year rise over the next 12 months.
CoreLogic data shows the states with the biggest rises in home values over the past decade are all in the west, with Nevada topping the table with a 12.9% increase over the last year. Idaho (12.3%) and Washington (10.4%) follow close behind.
Lawrence Yun, chief economist for the National Association of Realtors, said affordability was a “major headache for homebuyers and home sales were rising in Alabama because they were affordable, but in California people could no longer afford to buy.”
