Tight inventory in many housing markets is a key reason first-time buyers are having such a tough time acquiring a place of their own, the head of real-estate brokerage Coldwell Banker said Thursday.
Budge Huskey, chief executive of Coldwell Banker, discussed the state of the housing market in wake of fresh data that showed housing sales reached a post-recession high in July. But that annualized rate of 5.59 million homes is still below what would be a “normal” rate, he said. Historical patterns show 4.25% to 4.5% of households sell their home annually, he said. That suggests a “normal” level of sales each year in the high 5-million to low 6-million range.
Sales of existing homes rose for a third straight month, hitting the highest annualized rate since February 2007. But the percentage of first-time buyers fell to 28%, its lowest level of the year. Analysts say a healthy number would be around 40%.
“What’s happening is we’re having competition for multiple age groups for the same inventories, and in those situations, lower-income buyers are now competing with the better capitalized,” Huskey said.
Inventories continued to fall in July, and represent 4.8 months at the current sales rate. Huskey said a healthier rate would be about six months, and there are many markets in the South and Midwest that are closer into balance, unlike in coastal markets such as San Francisco and Seattle.
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Source: "Bidding wars hold back first-time buyers, Coldwell Banker CEO says" MarketWatch (August 24, 2015)