The number one obstacle facing home shoppers this spring is their own budget, according to a new study from realtor.com®. Nearly half of home buyers this spring say they’re looking for homes priced at or under $200,000—the segment of the housing market that has seen the largest year-over-year declines, according to a recent survey by realtor.com®, based on responses from about 1,000 buyers who plan to purchase a home in the next 12 months.
“The 2019 spring home buying season will be characterized by rising home prices, a moderate pace of home sales, and an influx of inventory,” says Danielle Hale, realtor.com®’s chief economist. “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.”
Thirty-eight percent of house hunters say that rising home prices will have the greatest impact on their home search, the survey found.
A bright spot is that buyers will find more housing choices this spring and less competition from home buyers overall. But the price point they’re targeting could limit their choices. “The drop in homes under $200,000 is likely to create a difficult environment for entry-level home buyers,” realtor.com® notes in its study. Inventories for homes prices at $200,000 or below have fallen 7 percent compared with a year ago. “Alternatively, only six percent of spring shoppers are looking for a home at or above $750,000—the price range that saw the largest increase since last year,” the study notes.
Only 17 percent of buyers say they expect to offer more than the asking price this year for their purchase, which is down from 26 percent a year ago.
“The spring homebuying season is an improvement over last year from an inventory perspective nationwide, but would-be buyers still face challenges,” Hale says. “This year, shoppers are going to be grappling with their budgets, rather than competition from a horde of other buyers. Instead of worrying about which tactics will help them get ahead, potential buyers will have to decide what they are willing to give up in order to stick to their budget.”
Buyers are expecting long searches too. The largest group of buyers say they’ve been searching for a home for seven months or more, followed by 26 percent who say they’ve been looking for four to six months.