Real Estate Market Challenged By Lack of Inventory, Higher Mortgage Rates

(KNSI) – The Saint Cloud Area Association of Realtors says the housing market continues to be a complicated one. The average selling price is up close to 20 percent compared to last year. Executive Director Kelly Schepers says there is one major factor driving the trend.

“We have continued to see a drop in listings. We are carefully watching that as it absolutely affects the inventory levels of the market and really determines how a buyer is going to proceed in looking for a home this year,” she says.

According to Schepers the issue of inventory, especially among “starter homes” and other affordable options, is not a new one. She was in Washington D.C. last week to discuss housing and help craft potential solutions. Schepers says there are not any silver bullets, but politicians and their staffs are aware of the seriousness of the problem.

Given the challenges facing buyers, Schepers says first-time purchasers are doing better than you would expect. She concedes several from that cohort have thrown in the towel on trying to realize the American Dream, at least temporarily. Others are learning and strengthening their position, though.

“We’ve seen their savings accounts grow. And so we’ve seen them come back to the market with a better position for themselves to be able to compete in this marketplace. They’ve got a higher down payment. They’re ready and willing to pay for their closing costs.”

As mortgage rates soar, having money set aside for a down payment is important. Between an increase in home prices and higher rates, the average mortgage payment has risen by 40 percent in the past year. Paying more upfront helps to mitigate that shock.

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