Yahoo Finance Housing Reporter Claire Boston joins Market Domination Overtime to break down how the K-shaped economy is reshaping the housing market. Homes priced above $1 million continue to move, while more affordable properties linger on the market, pushing more buyers toward renting as affordability pressures mount.
And we’re looking under the roof of the housing market as recent reports show uneven dynamics for buyers. Yahoo Finance’s Claire Boston joins here to discuss. So, Claire, we talk a lot about the K-shaped economy these days, maybe a little bit too much, but what does that look like in the housing market?
Hi Jared. Yeah, we are seeing the K-shaped economy alive and well in housing. and what we’re seeing is that the high end of the market, which depending on how you define it, might be like the top 10% of homes by price or like a million dollar and above price point. Those homes are doing really well. There are a lot of buyers looking to buy in that category, there’s good inventory and sales are rising. However, then you look at the lowest end, uh which again, depends on how you define it, but well below the median price, maybe in the 300,000 range or even less, sales there have really cratered and the buyers are just not there probably because affordability is difficult for them in that category. So it’s a very interesting divergence.
Yeah, so I was think thinking about affordability, this really has to affect first-time home buyers. Talk to me about that dynamic.
Definitely. So on the low end, it’s a bit odd. Uh it’s low supply so there’s not much to choose from, but those first time home buyers are also showing really low demand and that’s probably because we are still seeing home prices at record highs, mortgage rates are at nearly 6.7%. And I think a lot of those first time home buyers are looking at their options, they’re not liking what they’re seeing and they’re choosing to just sit out the market altogether.
Speaking of first-time home buyers, Zillow had a report recently on how long it takes to break even on a home purchase. and I imagine there are a lot of variables there, but walk us through that.
Definitely. So, Zillow calculated that on average in the US, it takes 15 years now to break even.
So that includes about eight and a half years to save for like the median sized down payment and then another six years for your home to appreciate enough that you will make money uh, you know, once you consider those realtor fees in your equation. And that is an average and we have so many different markets in this country. in really expensive places including New York City, also a lot of cities in LA, that number can be much, much bigger. It can be 30 to 40 years. And people think about buying and renting and like which one is like the better option all the time, but given current home prices, at least on paper, renting definitely wins in most markets.
