High Housing Prices Are Turning Potential Homebuyers Into Renters
Mar21

High Housing Prices Are Turning Potential Homebuyers Into Renters

Recent hikes in housing prices may be turning U.S. homebuyers into renters. According to a new report by Florida Atlantic University and Florida International University, hot housing markets in Houston, Dallas, and Denver where housing prices have skyrocketed are seeing an increase in renters over homeowners.┬áThe average time to sell a property in many markets right now is 6-12 months. Researchers traced housing markets in 23 cities for the report and found that 16 were in rent territory according to the Beracha, Hardin, and Johnson Buy Vs. Rent Index. Those 16 cities include Atlanta, Dallas, Denver, Honolulu, Houston, Kansas City, Los Angeles, Miami (the median home value in Florida is $209,623), Minneapolis, Philadelphia, Pittsburgh, Portland, San Diego, San Francisco, Seattle, and St. Louis. Each of the 16 cities has been experiencing a decline in demand for homeownership, but Dallas was listed as the most unfavorable for homeownership. “Of the metros in our index, Dallas is the highest and exhibiting the greatest downward pressure on the demand for homeownership,” said Ken Johnson, the real estate economist of FAU’s College of Business. “The extraordinary appreciation in the area is a major driver of this score.” Since the Great Recession, the Dallas housing market has soared. Now over 70% of homes in Dallas are priced above what they were in 2007 when the housing market took a nose-dive. Unfortunately, real estate market analysts say many of these houses in the U.S. are overpriced. Current prices aren’t due to the value of the house but the demand for it because of the nation’s low housing supply. In fact, up to 47% of foreclosed properties are still occupied. But it isn’t just the rising housing prices that are turning more potential homebuyers into renters. It’s also rising property taxes. A recent analysis by consumer financial website WalletHub found that New Jersey has the highest property tax rate in the country. Compared to Hawaii, which has the lowest average real estate tax of $525, New Jersey’s real estate tax is as high as $4,725. With high property taxes and high house prices, many potential homebuyers are unsure whether buying a home is worth it. This is especially true of millennials, who currently make up 34% of the U.S. housing market. In major metropolitan areas, it could be up to 20 years before the average millennial homebuyer has enough saved up for a down payment. And that number is just because of student loan debt and credit card debt. It’s true that the average American spends $1,800 a year on e-commerce transactions and the nation as a whole spends $26.6 billion annually on floral products. But...

Read More