Housing affordability crisis spreads to the Midwest and other lower-cost areas
Low mortgage rates and thriving employment should be the recipe for a strong housing market. Instead, theyre deepening Americas affordability crisis. What began on the coasts, in areas such as New York and San Francisco, is now radiating into the nations heartland and to cities such as Las Vegas and Charleston, S.C. Entry-level buyers are scrambling to purchase homes that are in short supply, sending values soaring.
Expectations that the Federal Reserve will cut interest rates this week will do little to change the sober reality: For many, prices have risen much faster than incomes, pushing homeownership out of reach for a new generation of hopeful buyers. Thats cooling the market, with the 2019 spring season shaping up as the slowest for sales in five years, according to CoreLogic Inc.
...Dean Rusch, a 29-year-old chemical-plant worker, has been trying to buy a starter home for less than $200,000 in Louisville, Ky., since April. On three occasions, houses he planned to tour were snapped up before he could get there. He was outbid on another. He finally had an above-asking offer accepted Sunday on a house listed for about $199,000, but only after his agent locked the door during a showing, keeping another buyer out. For much of his hunt, it was slim pickings.
...The housing recovery that began in 2012 has been unequal from the start. About 6 million Americans lost homes in last decades crash and needed time to rebuild their credit. Private equity firms such as Blackstone Group Inc. swept in to buy foreclosed properties at deep discounts and rented them back to many of those displaced former homeowners.
Now those people are back in the market, along with the bulging population of millennials eager for their first crack at homeownership. But many of the properties they want have already been picked over. Builders have focused on wealthier buyers willing to pay higher prices, and now some areas have too many expensive homes and too few homes where theyre needed.
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