Skepticism rises over the home sales market

But with the median home sales prices across the county sitting at about $1.6 million according to the most recent SAMCAR data, it is reasonable to expect the unprecedented levels of unaffordability will begin to take a toll, said a report from real estate database CoreLogic.

“The rise in home prices and interest rates over the past year have eroded affordability and are beginning to slow existing home sales in some markets,” said Frank Nothaft, chief economist for CoreLogic in a prepared statement.

To buttress his perspective, Nothaft points to markets in Southern California and the Bay Area, where costs pushed sales volume down by an average of nearly 10 percent over the last year.

“Further increases in home prices and mortgage rates over the next year will likely dampen sales and home-price growth,” he said in the statement.

Should that a projection come true, it would run counter to the expectation for the rest of the nation, as the report suggests U.S. home prices will tick up by about 5 percent over the coming year.

That growth would follow home prices across the nation increasing by 6 percent over the last year, according to the report. Online real estate database Zillow said the country’s median sales price at the end of June was roughly $231,000.

The website is also bullish on the national market, suggesting the median home sales price will tick up by about 6 percent over the coming year.

Zillow and CoreLogic differ in prognostications for the local housing market, as the website suggests housing prices in San Mateo County will increase by about 8 percent over the coming year.

Such an expectation is based partially on dwindling amounts of time properties are lasting on the market, as the average amount of time listed fell from 58 days in May 2017 to 37 days in June, according to Zillow.

Should home prices stay high, those most likely to be harmed by being shut out of the market would be millennials, according to the CoreLogic report.

Young professionals are more likely to want to own a home, according to a survey of roughly 3,000 people done in tandem with RTi Research, but affordability issues hinder their capacity to reach their goals.

Fifty-six percent of millennials, classified in the study as those between 18 and 40, cite affordability concerns as their primary reason for not being interested in homeownership, according to the report.

Conversely, 58 percent of boomers, or those between 55 and 74, claim they are not interested in homeownership because they don’t need to own a home at this stage, according to the report. Only 36 percent of the same age group cite affordability as their primary reason for avoiding the homeownership market, while 63 percent cite their current living situation as their justification for their disinterest.

Considering the sizable affordability hurdles precluding the younger generation from attaining their homeownership goals, a CoreLogic official called for action.

“One-third of millennial renters reported feeling they cannot afford a down payment to buy a home,” said CoreLogic CEO Frank Martell in a prepared statement. “With home prices rising quickly over the past few years and supplies low, first-time homebuyers face ever-growing challenges to find and buy affordable entry-level homes. More needs to be done to help our first-time buyers join the homeownership class.”

austin@smdailyjournal.com

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