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The U.S. real estate market has reached yet another milestone. The median price of homes in June surged to $435,300, an all-time high, while the sales of existing homes fell once more.
What is fueling this shift? And is there any hope for relief in the near future?
Florida State housing policy specialist Sam Staley asserts that this affordability crisis is intentional, and there isn’t an immediate solution. He attributes the rising home prices to halted construction during the pandemic and increasing demand from affluent buyers.
“The primary reason home prices have escalated beyond reach is the decline in new housing construction,” Staley stated. “Moreover, housing markets are still healing from an unforeseen surge in demand that occurred during the pandemic.”
Data released on Wednesday indicates that existing home sales in the U.S. decreased by 2.7% compared to the previous month, with year-over-year sales in June remaining unchanged.
Staley’s research areas comprise urban planning, regulation, and urban economics. He directs the DeVoe L. Moore Center, located within the College of Social Sciences and Public Policy. The center employs a market-driven perspective to analyze, formulate, and propose policy recommendations for state and local policymakers in Florida.
He mentions that housing affordability is influenced by location, and some areas are beginning to show signs of improvement.
“Florida and Texas are viewing a glimmer of hope,” Staley remarked. “Housing inventory is rebounding, and prices are stabilizing in those states. In Florida, we’ve observed the most stabilization in Miami, Cape Coral, Tampa, and along the Gulf Coast.”
He also highlights that legislative changes in Florida could accelerate housing development by reducing bureaucratic hurdles and promoting more localized initiatives.
Staley is open to discussing various topics with journalists, including:
- How pandemic-driven demand transformed housing markets.
- Why Florida is performing better than other regions nationwide.
- What new regulations might imply for builders and purchasers.
- What new homebuyers should keep in mind.
To set up an interview, reach out to Staley via email at [email protected].
Sam Staley, director of the DeVoe Moore Center, College of Social Sciences and Public Policy
How does the ongoing slowdown in new home construction impact the existing home market?
“All of this increases pressure on existing home sales and heightens competition for new homes. We are witnessing the effects of this demand start to wane, yet a full recovery in the housing market remains elusive. The DeVoe L. Moore Center estimates that Florida is confronted with a deficit of over 50,000 single-family homes and more than 60,000 rental units based on demand.”
Does the recent data indicating record high home prices imply that a housing market recovery is improbable this year?
“Recent legislative reforms will likely facilitate builders in increasing the housing inventory. These changes press local governments to innovate ways to construct housing and streamline the permit review and approval workflow. Recent statistics from Realtor.com and as reported by the Wall Street Journal clearly illustrate what economists already understand: An increasing housing supply alleviates the pressure on surging home prices. It’s evident that regions falling behind in supply — such as the West Coast, the Midwest, and the Northeast — continue to encounter rising home prices and diminished affordability.”
What guidance would you give to prospective homebuyers in the current market?
“Fluctuations in home prices can vary greatly by local markets. Here are some considerations:
- Potential buyers should collaborate with a realtor to comprehend the intricacies of their local market. Realtors are well-versed in the market, neighborhoods, and types of properties available, and they can assist in navigating these waters.
- If you opt to purchase, seek a home that is priced below the highest-valued home in the area.
- Buyers should exercise patience. They may feel compelled to acquire a home now due to rising prices. However, home prices are expected to decrease once supply meets demand. We are already witnessing some stabilization in home prices in Florida areas that saw rapid price increases in previous years.
- Buyers should have a clear understanding of their needs in a home and identify the characteristics that are essential to them. Always evaluate a home based on value for money.
- For most homebuyers, viewing a home as an investment is ill-advised. It is wiser to regard it as what economists categorize as a ‘consumption good’ — a product fulfilling the specific and tangible needs of the consumer. Although the house will transform into a personal asset, it’s not an investment akin to a 401(k).”
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