Buyers, time to put your finances in order

The housing market is a tale of two different experiences.

Homeowners are doing well, very well. The national median existing-home price in May was $419,300, a record dating back to 1999, according to the National Association of Realtors. (Prices aren’t adjusted for inflation). The Minneapolis Area Realtors reported the median sales prices in May in the Twin Cities was $385,000.

Through the past four years, average home equity among owners with mortgages is up by some $119,000. Thanks to the low interest rates environment in the years before the recent surge in inflation, many homeowners with mortgages are paying less on their debt service as a percentage of income than at any time since the 1980s.

The story of potential buyers — including first-time homebuyers, longtime renters looking to buy and employees eager to take a job in another city or county — is rife with barriers to ownership. Even though mortgage rates are down from their recent peak, the combination of high rates and high prices has pushed the finances of homeownership out of reach for many. The underlying problem is a lack of supply. The Minneapolis Area Realtors report for May noted despite recent gains in inventory, it would take about 20,000 active listings to achieve a balanced market. There are currently under 8,000.

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