It's a popular trick on those reality house-hunting shows — the real estate agent asks the buyers to make a list of everything they want. Then the agent takes them to a home that fulfills the wish list — and then drops the hammer that the house is about a million dollars over the buyer's budget.
No, you can't always get what you want, but maybe it's not your budget. Maybe it's your market.
Apparently 1 in 10 home searches nationally are "mismatched" when you compare what the buyer wants and what is available for sale, a jump from just 8 percent a year ago. That is the finding of a new report from real estate listing company Trulia, which compared the search results of potential buyers to the actual number of homes that met the search criteria in each market.
Trulia researchers found that "nationally 10.4 percent of searches at a certain price point failed to match the available inventory at that price point. And in many markets — including many in Florida, North Carolina and Texas — home seekers are disproportionately looking at homes priced much lower than available inventory."
Market mismatches will inevitably drive up prices where there are more buyers than there are homes that those buyers want. The opposite is true in markets where there are too many homes that buyers don't want. Prices drop. In Detroit, Philadelphia and Dayton, Ohio, there are too many lower-priced homes and not enough luxury houses to meet the current buyer demand on the high end. The same is true in Camden, New Jersey, Pittsburgh and Little Rock, Arkansas.
The high-end mismatch only occurred in 10 percent of the 100 markets Trulia looked at. Most of the mismatching happened in markets where there was too much luxury supply and too little affordable supply. Houston and Dallas rank top for mismatching, while Honolulu, New Orleans and Albuquerque, New Mexico, appear to be the most "matched" markets, with supply right where the demand is.
Charlotte and Raleigh, in North Carolina, and North Port, Florida, are also highly mismatched, with not enough affordable homes to meet demand. Nearly three-quarters of searches in Charlotte this year are for homes priced below the median market price.
For buyers, the mismatches are extremely frustrating, but for sellers, they can be profitable. If your home is in the right price category, where demand is high and supply is low, then you're in the money. Even if you're in a matched market, you're in a good place. If you're trying to sell a $50 million home in Aspen, Colorado, then you may have a problem, because there are a lot of those (so sorry).
Investors will want to take note of mismatches as well. If a market is highly mismatched, there are likely to be more renters than buyers, which bodes well for single-family landlords.