Most economists and housing experts agree that strong employment statistics and low mortgage rates translate into a hot housing market. Turns out this translation is feeding the affordability crisis in places formerly untouched by such concerns…America’s heartland.

From a recent collaborative effort by Gopal, Pickert and Buhager for BloombergNews, we learn that entry-level buyers from Las Vegas to Charleston to Grand Rapids to Louisville are scrambling to buy homes where there aren’t enough and where home values are skyrocketing.

In Grand Rapids, only 6% of the listings are affordable to buyers in the bottom 30% income level. The same is true in Louisville for 20% of the listings. Prospective buyers in Knoxville, Cleveland, Allentown and Rochester are also feeling the pinch. (Redfin is the data source for every location mentioned.)

According to Danielle Hale, chief economist with, “All signs point to a housing market that should be doing really well and it’s not. The number one constraint, despite low mortgage rates, is that people can’t find housing that they feel is ‘affordable.’”

West Coast cities have already watched prospective buyers retreat from the market altogether. Other less expensive areas are still experiencing vigorous but, according to Hale, “There’s just too little to buy and too much competition.” The result? The 2019 spring buying season “…is shaping up to be the slowest for sales in five years…” when looking at research from CoreLogic.

Redfin points to the growing divergence between the high and low ends of the housing market as the primary reason for sluggish sales. Its research indicates that prices in the bottom third of the market jumped +9% in June compared to one year ago whereas prices in the top third of the market rose just +1.1% for the same time period.

Zillow tells us that sales for lower priced homes plunged almost 20% in June 2019. The culprit? Insufficient supply in an affordable price range.

Jeff Davis, an agent in Louisville, told Bloomberg, “We have a lot more buyers pre-approved for mortgages than people closing on homes. What that means is that the struggle is not the financing. The strong is in the inventory.”

Despite pending sales contracts increasing +2.8% in June 2019 from May 2019, according to the National Association of REALTORS®, the number first time homeowners in Q2 2019 was the lowest since 2006 and just 33% as many as one year ago. African American homeownership fell to its lowest level since 1970.

Renters in traditionally affordable markets, as those mentioned above, are worrying that if they don’t buy now, they’ll never be able to buy. Jenny Schuetz, a fellow at the Brookings Institute Metropolitan Policy Program, said, “People at this point in the (economic) cycle start getting a little panicked that they need to get into the market.”

One buyer in Charleston, Mike Manesiotis, told the Bloomberg authors, “It’s not the interest rate; it’s the sheer cost. You’re spending $300,000 on a home that’s 1,000 square feet. You get two bedrooms, one bath and it needs a lot of work.”

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