Many factors make it difficult to buy a home these days, but the “biggest difference” in today's market is the housing shortage, Property Brother Drew Scott said Thursday on CNBC's “Your Money” event.
“I don’t think people realize that this lack of housing affects everything,” his brother Jonathan Scott added. The two host a television series about home renovation and design. “From the problem of homelessness to the cost of housing.”
According to the Federal Reserve's U.S. Census, the average sales price of U.S. homes was $412,300 in the second quarter of 2024. That's down from $426,800 in the first quarter and the peak of $442,600 in the fourth quarter of 2022, the Fed reports.
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“If we wait another 20 years, literally no young person will be able to afford to buy a home,” Jonathan told CNBC.
Why there is a housing shortage
According to the National Association of Realtors, there will be a housing shortage of 4 million homes as of mid-2023. Construction of new homes has been slow in recent years, and more buyers are competing for available homes, driving up prices.
Although there have been signs of improving housing supply recently, it is not enough to solve the underlying problems in the US housing market.
U.S. single-family housing starts, a measure of the number of new homes begun, rose to 1,027,000 in September, according to U.S. Census data. That's an increase of 2.7% compared to August.
At the same time, more home sellers entered the market in the fall. Many homeowners suffered from the “lock-in” or “golden handcuff” effect that prevented them from putting their homes on the market due to the record low mortgage rates they received due to the pandemic.
“It’s OK if you wait a few years”
The Property Brothers Drew Scott (l.) and Jonathan Scott.
Jason Davis | Getty Images Entertainment | Getty Images
Despite high housing costs, buying a home is still a good investment, the Property Brothers said.
According to CoreLogic, U.S. homeowners with mortgages have over $17.6 trillion in net equity as of the second quarter of 2024. Home equity increased by $1.3 trillion in the second quarter of this year, a year-over-year growth of 8.0%.
“You have to think long-term,” Jonathan said. “It’s okay if you wait a few years.”
Given the constraints on the housing market, Property Brothers says you can benefit from being creative, such as buying a home with a family member or even a friend.