The housing market is hot...maybe too hot. Home prices and mortgages are rising steadily, with nowhere to go but up thanks to low inventory. The latest figures from the Mortgage Bankers Association show the average mortgage purchase application is now $411,400, the highest level since February. At the same time, the average U.S. home price has risen for ten straight months and is 13-percent higher than one year ago, according to the S&P CoreLogic Case-Shiller Price Index.
The Houston market is experiencing the same pricing trend, driven by historically low supply. "I've been in real estate since 1992 and I've never seen inventory like this in my entire career," says Houston realtor Tricia Turner with Tricia Turner Properties. "Normally in Houston we have anywhere from 3 to 6 months' worth of inventory, right now we are at less than 30 days, which is unheard of."
"On a national level right now, there are four million less homes on the market than there typically are," she continues. "That's alarming."
That tight inventory has led to what amounts to open bidding wars on homes, driving purchase prices and mortgages to new levels. "For a home in the sweet spot---under $500,000---when that home goes on the market, we're gonna have somewhere between 10 and 30 offers on that property," says Turner. "And so people are cashing in their savings or whatever they can in order to make their offer the sweetest."
The ultimate solution to this is to build more homes, which developers are doing as fast as possible right now. But recovery will take time. "Economists project that by the end of this year and especially into 2022 we'll start to see more inventory and more of a balance in the market," says Turner. "But because we're in such a deficit, it could take upwards of six years to actually get back to a full, balanced market."