Dr. Lawrence Yun’s Friday morning Residential Economic Issues and Trends Forum cited rising home prices as a threat to home buyers and a lack of inventory in certain segments that are not helping us get out of the housing slump. Prices are rising, making first-time homeowners and move-up buyers less able to buy the home of their dreams. Yun stated the typical first time buyer is about 30 years old.
He discussed the tiny home movement and stated less than one percent of homes sold are small homes of under 1000 square feet. He stated this is not a significant trend or a new American Dream. Small houses are not a major solution to new home buyers who cannot find affordable housing.
The solution to rising affordability for new home buyers is more inventory. Pent up home sellers are staying in their homes longer than in the past. If we can get some of these sellers, who now have more equity in their homes, this will help the market.
What about new construction? Multi-family housing starts are up, but single-family starts are still depressed. There are massive housing shortages in certain cities such as San Francisco and Grand Rapids, but builders still have problems getting construction loans. A new loan process helping small home builders at the SBA will help them finance spec homes and perhaps boost construction on up to five units at a time.
Yun received a round of applause from the REALTOR® audience when he announced when the FSBO market is on a serious decline. He explained the REALTOR®’s face-to-face interaction with their clients is crucial to building relationships and to enforce our value with consumers.