The Top Issues Facing the Real Estate and Housing Industries Today

From a lack of inventory to rising home prices, there’s a long list of factors that have the potential to stunt growth when it comes to positive activity in the market.

The real estate and housing industries are known for being volatile in nature. Between the ups and downs of the economy and changing trends among consumers, there’s a seemingly endless list of factors that determine whether or not people are willing and able to buy a home. And as the housing market continues to bounce back from the Great Recession, that list of factors is getting longer.

One of the biggest problems that’s facing the real estate industry today is the fact that individuals are still recovering financially from the economic downturn. Without the capital necessary for a down payment on a home, potential buyers are turned down before the purchasing process ever begins. And according to Dawn Bremer, a realtor with Keller Williams in the Chicagoland area, that financial burden is being coupled with rising home prices and mortgage rates.

“The financial aspect of buying a home is causing a lot of stress and creating obstacles for prospective buyers. It comes down to the fact that buyers don’t have enough saved for the down payment on a home. And with poor credit history, a tough job market and rising home prices adding costs on top of that, buying a home can be difficult in today’s economy,” said Bremer. “With mortgage rates also on the rise, there are a lot of factors working against the real estate market.”

In addition to those financial roadblocks, another issue that’s negatively impacting the housing market is a severe lack in inventory. Buyers are faced with limited options when searching for a home to purchase, which potentially leads to frustration and stagnation in the industry.

“The lack of inventory in today’s real estate market is very real. It’s incredibly frustrating for a lot of first time homebuyers—there’s no doubt that it’s a seller’s market right now,” said Jean-Marie Minton, a Chicago-based real estate broker and advisor with Keller Williams. “Another thing that has the potential to stunt the real estate industry—especially in major metropolitan areas like Chicago—are real estate taxes. People on all ends of the financial spectrum are concerned with what their costs are going to be down the line, and whether or not they’ll be able to afford a specific home in the long run.”

While those issues are going to take market corrections to resolve, there are other obstacles that are within a buyer’s power to overcome. One common misunderstanding, for example, is that you need to have 20 percent to put down on a home. But the truth is that you can purchase a home with as little as three percent down. Another common myth in the housing industry is that your credit score has to be at or above 720. However, more than 50 percent of approved mortgages have a credit score that falls between 600 and 749.

According to Bremer, that’s why it’s more important to be educated about the real estate and housing industries than ever before. Even though there are certainly issues that potential buyers will have to face, it’s still possible to purchase a home in today’s economy. And going forward in 2017, she expects housing prices to move in a positive direction, which will hopefully solve one of the biggest crises in the industry: trust.

“While more first time home buyers are making the leap and purchasing a new home, current homeowners are more hesitant to move into larger and more expensive homes. That’s because they aren’t truly ready to trust the market,” Bremer said. “Even as home prices continue to move in a positive direction, it’s going to take a lot for people to be confident enough to make such large investments on a consistent basis.”