The U.S. housing market just hit another record. Median home prices in June climbed to $435,300, the highest ever, while existing home sales dipped again.
What’s driving the trend? And is there any relief ahead?
Florida State housing policy expert Sam Staley says this affordability crunch is no accident, and there’s no quick fix. He points to stalled construction during the pandemic and rising demand among high-income buyers as key reasons home prices soared.
“The biggest reason that home prices have become unaffordable is the slowdown in building new housing,” Staley said. “And housing markets are still recovering from an unanticipated spike in demand during the pandemic.”
Data released Wednesday shows that U.S. existing home sales fell 2.7% from the prior month, while year-over-year sales in June were unchanged.
Staley’s areas of research include urban planning, regulation and urban economics. He is the director of the DeVoe L. Moore Center housed in the College of Social Sciences and Public Policy. The center utilizes a market-oriented lens to analyze, develop and propose policy recommendations and guidance for policymakers at the state and local levels in Florida.
He says housing affordability depends on location and that some regions are finally seeing a turnaround.
“Florida and Texas are seeing the light at the end of the tunnel,” Staley said. “Housing supply is bouncing back, and housing prices are moderating in those states. In Florida, we’ve seen the most moderation in Miami, Cape Coral, Tampa and the Gulf Coast.”
He also notes that legislative reforms in Florida could help speed up housing development by cutting red tape and encouraging more local action.
Staley is available to speak to reporters about:
- How pandemic demand reshaped housing markets.
- Why Florida is faring better than other parts of the country.
- What new policies could mean for builders and buyers.
- What new homebuyers should know.
To arrange an interview, contact Staley via email at sstaley@fsu.edu.
Sam Staley, director of the DeVoe Moore Center, College of Social Sciences and Public Policy
How does the current slowdown in building new homes affect the existing home market?
“All this puts pressure on existing home sales and increases competition for new homes. We are seeing this demand effect tail off, but we still haven’t seen a full recovery in the housing market. The DeVoe L. Moore Center estimates that Florida is facing a shortage of more than 50,000 single-family homes and more than 60,000 rental units based on demand.”
Does the latest data showing home prices hitting a record high signal that a housing-market recovery is unlikely for this year?
“Recent legislative reforms will likely make it easier for builders to add to the housing stock. These reforms create a leaning on local governments to find new ways to build housing and streamlining the permit review and approval process. Recent data from Realtor.com and reported by the Wall Street Journal show pretty clearly what economists already know: Increasing housing supply reduces pressure on rising home prices. It’s clear that those regions which have not kept pace with supply — the West Coast, the Midwest and the Northeast — continue to face rising home prices and reduced affordability.”
What advice would you provide to potential homebuyers in this current market?
“Changes in home prices vary significantly by local markets. A couple of thoughts come to mind:
- Buyers should work with a realtor to understand the dynamics of their local market. Realtors know the market, neighborhoods and types of housing going on the market, and they can help navigate the market.
- If you buy, look for a home that is priced below the highest-priced house in the neighborhood.
- Buyers should be patient. They may be tempted to buy now because housing prices appear to keep going up. But home prices will fall once supply catches up. We are already seeing some moderation in home prices in Florida regions that experienced some of the fastest growing prices in recent years.
- Buyers should be very clear about what they want in a house and what characteristics are important to them. Always look at a house as value for money.
- For most homebuyers, purchasing a home as an investment is unwise. They are better off thinking of their home as what economists call a ‘consumption good’ — a product that meets the specific and tangible needs of the consumer. While the house will become a personal asset, it’s not an investment like a 401(k).”