Will Your Chance to Own a Home Diminish in this Hot Housing Market?

Drazen Zigic / Getty Images/iStockphoto

A limited housing inventory and high demand have created a hot housing market across the nation. As demand exceeds what’s available on the market, the average price of a home jumped to a record 21% in April compared to the same time last year, according to a report from Redfin, a real estate brokerage, as reported by Business Insider.

See: Houses Are Selling the Fastest in These 10 Real Estate Markets
Find: In Less Than a Decade, You Won’t Be Able To Afford a Home in These Cities

First-time homebuyers, and anyone looking for affordable prices, have been caught in bidding wars — some competitive buyers willing to pay $20,000 to $30,000 above the listing price, noted South Dakota News Watch. South Dakota, like many other states across the U.S., has seen high demand from out-of-state buyers, decreasing the number of available homes on the market with some homes selling in under two days.

South Dakota News Watch also reported that low-to medium-income South Dakota residents have been forced to put the dream of homeownership on the backburner and remain in rental properties, limiting the availability of affordable rental units.

In Salt Lake City in Utah, some real estate agents have reported bids up to $100,000 over the asking price, according to Desert News.

Building Wealth

“Right now we are seeing a substantial increase in home prices, which could be a precursor to more widespread inflation throughout the economy,” said Redfin Chief Economist, Daryl Fairweather, as reported by Business Insider.

See: These 11 Homebuyers Share Their COVID-19 Real Estate Stories
Find: In Tight Housing Market, Buyers Go to Extreme Lengths to Land Homes

The Redfin report also showed that the housing inventory crisis has brought the average home price to $348,500 with the average asking price reaching $360,975, both a record high. The lumber shortage is another problem making a big impact on the housing market by further driving up the price of homes.

“When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans,” Fairweather said in a statement, as reported by Business Insider.

That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society,” she added.

More From GOBankingRates