Unlike in recent years when competition from multiple bidders was the biggest obstacle for home shoppers, this year it’s likely to be low budgets that are the main challenge for most buyers.
That’s according to a new realtor.com study of almost 1,000 prospective buyers, which shows that almost half of them are looking at homes worth $200,000 or less this spring.
“The 2019 spring home buying season will be characterized by rising home prices, a moderate pace of home sales, and an influx of inventory,” Danielle Hale, realtor.com’s chief economist, said in a statement. “More homes on the market and lower mortgage rates will help offset some difficulties associated with price gains, but affordability will remain the primary challenge for shoppers, particularly in lower price segments.”
The main issue highlighted by buyers in the survey is rising home prices, which will impact 38 percent of respondents, realtor.com said.
The good news is that buyers in the $200,000 and below segment will at least be facing less competition. But they could still face limited choices, the survey shows.
“The drop in homes under $200,000 is likely to create a difficult environment for entry-level home buyers,” realtor.com noted.
That’s because the level of inventory for homes priced in the segment has fallen by 7 percent since last year, realtor.com said.
“Alternatively, only six percent of spring shoppers are looking for a home at or above $750,000, which is the price range that saw the largest increase since last year,” the study authors said.
Just 17 percent of buyers say they expect to offer more than the asking price for the home they settle on, which is down from 26 percent last year.
"The spring homebuying season is an improvement over last year from an inventory perspective nationwide, but would-be buyers still face challenges,” Hale said. “This year, shoppers are going to be grappling with their budgets, rather than competition from a horde of other buyers.”
Buyers may have to keep up their home search for longer, too. The study showed that a majority of prospective buyers have already been searching for seven months or more to find a suitable home.