Even in a housing market that has slowed significantly due to rising mortgage rates, the supply of homes for sale is about half of what it was in 2019.

The shortage is hitting some buyers more than others.

The popular 30-year fixed mortgage rate hovered in the high-6% range in May. At that level, buyers with an annual income of $100,000, slightly above the national median, could afford a house with a maximum price of about $341,000. But just 39% of the homes for sale were listed at or below that price point in May, according to a new report Thursday from Realtor.com with the National Association of Realtors.

In a balanced market of supply and demand, 64% of homes should be affordable to buyers who make $100,000 a year, given the size of that population. As a result, the market currently lacks about 285,000 of those listings.

Just five years ago, those same earners could afford two-thirds of homes for sale. Home prices and mortgage rates were significantly lower.

The lack of affordable homes heated up competition in the market this spring, which reversed the cooldown in home prices that started last summer.

“It’s almost a tale of two cities where we have houses under $500,000, they’re absolutely selling incredibly fast. Under $350,000 and $400,000, there’s multiple offers,” said Noah Herrera, a real estate agent in Las Vegas, during an open house in mid-May. “Over $500,000, it slows down a little bit.”

At the higher price ranges, too many homes are for sale for the number of Americans who can afford them. In fact, for every home listing above $680,000, the market is lacking twice as many homes under $341,000.

“Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve,” said Realtor.com’s chief economist Danielle Hale.

The pricy existing home market is pushing more buyers to new construction, which, ironically, used to come at a price premium. Homebuilders have been offering incentives such as upgrades or temporary mortgage rate buydowns. Those, however, are decreasing as builders see more demand and gain more pricing power.

As with all else in real estate, location is everything. The areas that have the biggest deficit of affordable homes are El Paso, Texas; Boise, Idaho; Spokane, Washington; several Florida markets; and of course, Riverside and Los Angeles, California, which are some of the priciest housing markets in the nation.

Areas in the Midwest continue to have the highest number of affordable homes. The four cities with the largest supply of affordable homes are all in Ohio. They are followed by Syracuse, New York; Pittsburgh, Pennsylvania; and St. Louis, Missouri.

The supply situation does not appear to be improving. New listings of homes for sale in the first week of June fell 25% year over year to their lowest level of any early June on record, according to Redfin.

That lack of new listings has pushed the total number of homes on the market down 5% from the same period a year ago.

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““I do think that there will be issues with respect to commercial real estate.””

— Treasury Secretary Janet Yellen, in an interview Wednesday with CNBC’s “Squawk Box.”

Treasury Secretary Janet Yellen, in her first interview since the U.S. debt-ceiling was lifted last week by Congress, warned on Wednesday about the potential for banks to feel strain from their exposure to weakening commercial real estate valuations.

Yellen was asked by CNBC “Squawk Box” host Andrew Ross Sorkin about if she’s worried about the state of estimated $20.7 trillion commercial real-estate market, particularly the office, and if weakness in the sector could potentially spark more bank failures.

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Buyer activity and real estate listing activity are gaining momentum again in the South Okanagan, as residents have adjusted to the current late spring market.

“The market is doing really well,” Association of Interior Realtors Past President Lyndi Cruickshank said.

“I think a lot of people felt really shell shocked when the interest rates started to rise, understandably so, as we often feel that resistance when there’s a dramatic change in our lives. And is often the case, people settle into what our new reality is, and our interest rates are certainly significantly higher than they were. But people are finding ways to manage.”

There has been a bit of a decline in the average home price, which is helping buyers. And as more homes come on the market, it ultimately helps the consumers looking to purchase.

“I talked to so many people last year that really wanted to be able to sell their home, but there was such a fear as to where they were going to go. So now that we have seen the inventory start to open up quite a bit. It’s allowing them more choice.”

Home inventory has increased by 38 per cent in active listings.

In the South Okanagan, the benchmark price for a single-family dwelling dipped 6.6 per cent, to $772,200. Townhouses ($558,100) and condominiums ($427,700) also dropped in May compared to this same time period last year.

“We’re certainly more into a buyer’s market than we have been over the last year. Previously, we were very predominantly held by a sellers market. And we’re seeing a lot more strength on the buying side now,” Cruickshank said.

She added that this is typically the time of year that people start to look for homes and that people really traditionally look to put their homes on the market.

“That plays a big role, obviously, in that increase in activity that we’re experiencing right now.”

The more balanced market will give buyers more of an opportunity to do their due diligence before purchasing.

“We’ve got a long way to go. We came from such an extreme market this time last year. And then we had that real hit with interest rates and things really slowed down very dramatically. So it’s really nice to see things starting to just move forward in a more normalized way again.

Still, finding homes in the South Okanagan remains to be a challenge as vacancy rates remain low, even as developments continue to grow.

“It’s going to take years, years before we’re ever at a place where our inventory is going to meet demand unless we see something really dramatic. And that’s right across the country when we look at what the demand is, and the current supply. So I don’t see that changing.”

Advice for first-time home buyers remains the same: finding a realtor and figuring out what time to buy is best for you.

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