In real estate, it’s generally either a buyer’s or a seller’s market. Since the industry reopened in mid-2020, it has morphed into the mother of all seller’s markets.
And aspiring homebuyers increasingly think the jig is up and it’s not even worth trying.
The poll, part of a monthly and quarterly study that surveyed around 1,000 people via telephone interviews over a period of three weeks in January, found that home purchase optimism is the lowest it’s been since May 2020, but that was before lockdown lifted and nobody knew which direction the market would go.
The U.S. housing market is a nightmare for buyers right now. Demand for new homes is at a record high, but the inventory of new homes available is at a record low. They’re getting snapped up fast, too, selling around 10 days faster than they were a year ago.
This nasty combination of circumstances has led to some pretty wild stories on the housing front, like the two-thirds of buyers who placed bids on homes they had never seen, or the one out of every four home seekers willing to go as high as $100,000 over budget on a dream home.
No one is feeling the crunch more than young people. A dearth of affordable housing for middle-income earners and crushing competition is hitting younger demographics hard. Millennials, who are now entering what is considered the prime homebuying age range, are getting mercilessly outspent on a market that has vanishingly few affordable options in the first place.
Fannie Mae’s poll indicates that younger people surveyed are about 40% more convinced than general survey audiences that now is a good time to stay away from homeownership, with only 15% of respondents ages 18 to 34 thinking it’s a good time to buy.
“Younger consumers—more so than other groups—expect home prices to rise even further,” said Doug Duncan, Fannie Mae senior vice president and chief economist, adding that “while the younger respondents are typically the most optimistic about their future finances, this month their sense of optimism around their personal financial situation declined.”
Respondents to the poll were more convinced than in previous surveys that home prices will go up over the next year. People were also more concerned about job stability than in past results, despite last week’s surprisingly strong January jobs report. Fears over higher mortgage rates were also a big reason behind last month’s pessimistic outlook on the housing market.
The conditions of real estate today are all the ingredients needed for a perfect seller’s market cocktail. Rampant competition, rising prices, and quick turnover when homes are for sale mean that the market is leaning toward favoring sellers and not buyers. As long as the demand for new homes outpaces the supply of available ones, prospective homebuyers may be more inclined to wait this market out.
This story was originally featured on Fortune.com