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August 2023 » thefivestar.com 61 J O U R N A L August 2023 SMALL SINGLE- FAMILY HOMES RANK THE RAREST TO FIND A nother post-pandemic record has been set—just 1% of homes have changed hands this year, the lowest share in a decade—according to Redfin who further reported that this number meant 14 of every 1,000 homes sold during the first six months of 2023. This number is down from 19 of every 1,000 during the same period in 2019 which means the first half of 2023 reported the lowest turnover rate in at least a decade. In 2018, Freddie Mac (a GSE) estimated that about 2.5 million homes needed to be built in order to meet demand, with the main lack of construction of single-family homes. The pandemic homebuying boom of 2020 and 2021—mainly driven by record-low mortgage rates and remote work—depleted already low inventory levels. Finally, 2022's soaring mortgage rates—average rates nearly doubled from January to June—exacerbated the shortage by handcuffing homeowners to their comparatively low rates. "The quick increase in mortgage rates created an uphill battle for many Ameri- cans who want to buy a home by locking up inventory and making the homes that do hit the market too expensive. The typical home is selling for about 40% more than before the pandemic," Redfin Deputy Chief Economist Taylor Marr said. "Mortgage rates dropping closer to 5% would make the biggest dent in the affordability crisis by freeing up some inventory and bringing monthly payments down. But there are a few other things that would boost turnover and help make homes more affordable. Building more housing is imperative, and federal and local govern- ments can help by reforming zoning and making the building process easier. Financial incentives, like reducing transfer taxes for home sellers and subsidizing major moves with tax breaks, would also add to supply." The suburbs reported the most shrinkage as 16 of every 1,000 large suburban houses have changed hands this year—two-thirds as many as 2019. House hunters searching for larger homes in the suburbs have seen the steepest drop in options; just about 16 of every 1,000 four-bedroom-plus suburban sin- gle-family homes sold in the first half of this year, down from 24 of every 1,000 that sold in the same period in 2019. That means buyers of that home type have 33% fewer houses to choose from. "New listings normally hit the market on Thursdays, and I have buyers who are excitedly checking their Redfin app Thurs- day mornings, only to find nothing new," Phoenix Redfin Premier agent Heather Mahmood-Corley said. "That goes for buyers in every price range in every type of neigh- borhood, but what people want most are those move-in ready, mid-sized homes in neighborhoods with highly rated schools. Those are hardest to find because for people to buy one, someone needs to sell one. That's not happening, because so many of those homeowners have low mortgage rates." For every type of home in every type of neighborhood, sales have dropped over the last four years. The turnover rate of condos and townhomes didn't shrink as much as that of single-family homes during the pandemic. Supply of that home type wasn't depleted as much because there wasn't as much demand for them. Average-priced and median sized homes were the hardest to find in the first half of the year; smaller houses in the city have the low- est turnover rate of all home types in Redfin's analysis. Roughly 11 of every 1,000 two- and three-bedroom single-family homes sold in the first six months of 2023, compared to 14 per 1,000 during the same period in 2019. Two- to three-bedroom homes in suburban neighborhoods are essentially tied with their urban counterparts for the lowest turnover rate, with 11 of every 1,000 changing hands this year. That's down from 16 of every 1,000 in 2019. HIGH INTEREST AND PRICES STUNTING HOUSING DEMAND A s the number of homes for sales dips to near record lows, demand increased in June 2023 propping up home prices, even as mortgage rates around 7% have kept many buyers on the sidelines. This information comes by way of Redfin's Housing Market Tracker which overall found the median U.S. sale price was $426,056 or 1.5% ($6,341) below the all-time high of $432,397 set in May 2022. June's median sale price was down 0.6% Average-priced and median sized homes were the hardest to find in the first half of the year; smaller houses in the city have the lowest turnover rate of all home types in Redfin's analysis.