Homebuyers across the country and in the Queen City aren’t finding the house they really want. But the current market mismatch has moved beyond the lack of a “dream home” and closer to the territory of “I’m just not wanting what you’re selling” according to a new report from real estate website Trulia.
U.S. homebuyers are finding fewer properties that fit their budget, and in some markets, the majority of available homes may be too expensive given the current demand, a new analysis by Trulia suggests.
In a new semi-regular report called MarketMatch, the site gauges the price points home seekers are searching and compares them to the prices of available properties.
In their first look, they found that nationally 10.4 percent of searches at a certain price point failed to match the available inventory at that price point. And in many markets – including many in Florida, North Carolina and Texas – many home seekers are disproportionately looking at homes priced much lower than available inventory.
When it comes to shopping for a home, buyers are at the mercy of the market. But, what they’re searching for is more a function of budget and tastes, the report said.
A prospective home buyer looking in the same price range as a bunch of other prospective buyers in a market where there are very few homes available in that price range, will have a frustrating time. On the flip side, a seller who has priced in a price range that very few people are interested in may be waiting for a while.
These sorts of mismatches in the market can drive up prices in certain popular price ranges or cause properties to sit on the market longer than they otherwise would. Many metros are tight on starter homes at the moment and heavy on higher-end homes, according to Trulia data.
“This puts upward pressure on starter home prices, especially in metros where people seem most interested in lower price ranges,” said Trulia’s Felipe Chacon in the report. “As peak home buying season wraps up across much of the country, we look at how well individual markets match up with search interest. We categorized metros into three groups.”
The three groups from Trulia are:
– Places where there’s a disproportionate amount of searches for homes are in lower price ranges relative to what is available;
– Places that are right on the money, where listing prices and search interest match up well;
– Places with rich tastes (or lousy housing stock) where people are disproportionately searching for homes at higher price points relative to what is available.
While looking at all active listings and the number of times those listings were viewed nationally and in the 100 largest U.S. metros from March 15 to Sept. 15 Trulia found:
– Nationally, the mismatch rate is 10.4 percent between the distribution of home prices that users are viewing and the distribution of prices of all listings, which is what the site calls “market mismatch.” This compares with a market mismatch rate of 8.3 percent during the same 6-month period in 2015.
– 53.4 percent of all properties viewed nationally were priced below the median list price compared with 51 percent during the same period in 2015.
– Houston and Dallas have the highest and second highest market mismatch scores of 31.2 percent and 30.3 percent, respectively. As market mismatch approaches 0 percent, you would expect the share of searches that go to homes below the median to approach 50 percent (half the homes would receive half the search activity). A full three-quarters of all search activity occurred on houses that were priced below the median listing price in both these metros though.
– Buyers in only 10 of the 100 metros looked at more expensive homes than were mostly available. These are places where users are showing disproportionate interest in higher priced homes. This list includes Detroit, Philadelphia, and Dayton, Ohio, where only 39.7 percent, 42.2 percent, and 44.8 percent of searches are for homes that are less than the median listing price.
– Honolulu, New Orleans, and Albuquerque, New Mexico, have the lowest market mismatch scores of 6.2 percent, 6.9 percent, and 7 percent, respectively.
– Miami saw the largest increase in market mismatch going from 8.6 percent in 2015 to 21.2 percent during the same period in 2016. Colorado Springs, Colorado, on the other hand saw the largest decrease market mismatch going from 28.6 percent in 2015 to 16.1 percent in 2016.
When it comes to the list of places with the highest proportion of searches being done in the lower half of all listings during that time, Houston leads this group with the highest market mismatch score of 31.2 percent, according to the report.
This is actually a slight improvement from 2015 when the market mismatch was 32.1 percent. With a median listings price of $334,950 during the 6-months ending Sept. 15, 75.5 percent of all properties viewed in Houston were homes below this price. Of the six Texas metros in the analysis, five of them are in the bottom quarter of market match scores in 2016.
Also making this list are Charlotte and Raleigh and North Port, Florida, all with more than 69 percent of search interest being directed toward the bottom half of listings by price, all with market mismatch scores over 23 percent and higher than their respective 2015 scores.
But a house hunter or seller in any of the report’s top 10 Market Match metros, have good odds of finding their homebuying experience less frustrating than someone in a mismatched market. In New Orleans, for example, where the market mismatch was 6.9 percent, almost exactly half of all properties viewed were below the median listing of $236,000. Buyers looking for homes in the popular $150,000 and $250,000 range find this to be the most popular price range for people listings their homes, according to the report. Baton Rouge also makes this list coming in at number 10 with a market mismatch score of 8.6 percent.
The report notes there are many factors that could be contributing to mismatched search trends relative to available listings including local economic factors and demographic trends, to just changing Trulia user demographics. As a longer history of search interest relative to listings becomes available going forward, how individual areas change over time and in response market forces will shed more light on how search and inventory patterns relate to pricing.