September 14, 2018
The housing market is showing signs of cooling off. Yet, housing demand and affordability has emerged as a hot topic.
Marcus & Millichap’s Hessam Nadji told CNBC that the shift now being experienced in the housing sector can be tied to a consumer trend toward renting, primarily, as well as a rebalancing of supply and demand.
He points out that home prices appreciated on average 14% in the top 10 markets over the past 12 months. Overall, prices went up 5% nationally, which Nadji says shows “clearly there’s overheating on the prices going on among certain markets.”
One of the key factors driving prices up is an undersupply of new construction. Another is consumer behavior, which is now leaning more towards renting. Nadji notes, that’s a key reason the apartment rental market is showing tremendous strength, while the single family market is less affordable.
Part of that is being driven by the high cost of owning in markets where job growth is occurring. But, it is also playing off changes in how consumers view buying versus renting.
Nadji says the American Dream today may be “as much about finding a great apartment near a great job where you don’t have commute or get in a car, as it is about buying your first time home.” That shift, coupled with tax law changes that provide less incentive to buying an entry-level home, has resulted in fewer first-time home buyers showing up among today’s home buyers than historically was the case.
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