Housing Shortage Leads To Skyrocketing Home Prices

According to the National Association of Realtors, the median home price in April jumped to more than $391,000 — an all-time high.

Housing Shortage Leads To Skyrocketing Home Prices
Michael Conroy / AP

The housing market is tough to navigate these days.

Blair Thompson is a lawyer in Baltimore, Maryland who has been looking to buy a home since last summer.

Much of her job is done remotely, so she's checked every corner of the Baltimore and Annapolis regional markets, but sky-high prices are keeping her at bay.

"It feels embarrassing, to be honest," she said. "Because I got degrees. I have a job. I'm not an irresponsible spender. I have a good credit history. So, it feels like buying a home should be something I can do." 

Ideally, Thompson wants something in the Baltimore suburbs, close to her parents — especially as they age. But she fears it could be a while before she finds one. She's one of many that feel like the cost of home ownership is completely out of reach.

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Home prices in Maryland have increased by more than 11% over the past year, making it incredibly difficult for first-time buyers.

The demand for home ownership grew exponentially once the pandemic took hold, but a housing shortage, supply chain lags, and low interest rates meant the demand simply couldn't be matched, pushing prices to new heights.

However, some real estate agents are confident the prices will cool now that interest rates are higher.

"I think the market is slowly shifting into a more balanced position," realtor Carolina Hurtado said.

But it's not just home prices that are increasing. Rent is also rising across the country, further complicating issues.

Zillow senior economist Jeff Tucker says it's making things particularly difficult for first-time home buyers.

"First-time buyers who are renting today are really stuck between a rock and a hard place," he said. "They're faced with rising rents if they stay put in the rental market, versus much more costly home ownership opportunities in the purchase market."

The good news is the rise in rent leveled off in April and the number of people competing to buy homes has also dropped. However, it's unclear how far both will need to fall before would-be first-time home buyers feel hopeful about their prospects again.