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First-Time Homebuyers Face Worsening Starter-Home Shortage Heading Into 2017 Reports Trulia

House Hunters in Portland, Miami, San Francisco, Sacramento, Los Angeles and Denver Among the Hardest Hit as Tight Starter Home Inventory Becomes More Unaffordable

SAN FRANCISCO, Dec. 14, 2016 /PRNewswire/ -- Trulia®, a leading destination for homebuyers and renters, today released the findings from the Trulia Inventory and Price Watch. This quarter's report found that the number of homes for the average first-time homebuyer saw its steepest year-over-year drop in three years, falling 12.1% since 2015. Moreover, these buyers will need to pay 1.9% more of their income on average to buy a starter-home in their local market.

U.S. Housing Inventory Shrinks 9.1% Year-Over-Year
Nationally, housing inventory fell for the sixth consecutive quarter, dropping 9.1% from a year ago. Across different housing segments, home buyers saw the biggest decreases in starter and trade-up home inventory. The number of starter homes and trade-up homes on the market dropped 12.1% and 12.9% from this time last year, respectively. Meanwhile, premium home inventory fell a more moderate 5.6%.

                                                                                       2016 Q4 National Inventory Monitor

Housing Segment

2016 Q4 Inventory

Change, 2015 Q4 - 2016 Q4

Median List Price

Share

Inventory

% of Income Needed to Buy Median Price Home in Segment

% Change in Median List Price

Percentage Point Change in Share

% Change in Inventory

Additional Share of IncomeNeeded to Buy a

Home (Percentage-Point Change)

Starter

$164,920

24.8%

293,059

38.5%

7.6%

-0.1 pts

-12.1%

1.9 pts

Trade-Up

$285,895

24.0%

283,165

25.5%

6.3%

-1.2 pts

-12.9%

0.9 pts

Premium

$591,262

51.1%

594,375

13.9%

7.2%

+1.2 pts

-5.6%

0.5 pts

Among the 100 largest U.S. metro areas. Share is the percent of for-sale homes that fall into each segment, which is defined separately for each metro. Median price for each segment is the stock-weighted average of the median price of each segment in each metro. Some point change estimates may be slightly different than stated values because our differing procedure occurs before rounding.

 

Harder to Get Started for First-Time Home Buyers
Declines in the affordability of starter homes continues to plague first-time home buyers. Today, the average starter-home buyer will need to spend 38.5% of their monthly income to buy a starter home – a 1.9 percentage point increase from last year. This decline in affordability is more than twice as much for trade-up homes (up 0.9 percentage points) and nearly four times the amount needed to buy a premium home (up 0.5 percentage points). Comparatively, buyers of trade-up homes and premium homes would each need to spend just 25.5% and 13.9% of their income to buy a home, respectively.

Starter Home Crunch Squeezes Coastal Markets
In many coastal housing markets, affordability has eroded significantly over the last year, especially in Tacoma, Wash. and Portland, Ore. But in Sacramento, Calif., Los Angeles, San Francisco, San Diego and Miami, starter home unaffordability continues to be a persistent problem. Among the 100 largest U.S. metros, these metros ranked in the top 10 annual declines in affordability for starter homes from 2012 to 2015 and remain in the top 10 for declines in affordability for starter homes from 2015 to 2016.

Housing Markets with Largest Decrease in Starter Home Affordability 2016 vs 2015

U.S. Metro

Additional Share of Income Needed to Buy Starter Home in 2015 Q4 vs. 2012 Q4 (Annual Average Percent Change)

2015 vs. 2012 Change Rank

Additional Share of Income Needed to Buy Starter Home in 2016 Q4 vs. 2015 Q4

2016 vs. 2015 Change Rank

Tacoma, WA

2.5%

19

7.7%

1

Portland, OR-WA

3.5%

14

6.9%

2

Miami, FL

4.9%

10

6.5%

3

North Port-Sarasota-Bradenton, FL

1.5%

31

6.1%

4

San Francisco, CA

6.0%

7

5.7%

5

Sacramento, CA

7.0%

5

5.7%

6

San Diego, CA

7.6%

3

5.6%

7

Los Angeles, CA

7.0%

6

5.4%

8

West Palm Beach, FL

2.7%

17

5.1%

9

Denver, CO

2.7%

18

5.0%

10

NOTE: Among 100 largest U.S. metros. Full data set available here.

 

QUOTES FROM TRULIA'S CHIEF ECONOMIST RALPH MCLAUGHLIN:

  • "Tight inventory will still be a big obstacle to homeownership in many markets in 2017, but I'm cautiously optimistic that we'll see the bottom of the current housing shortage as the year progresses. That said, buyers might not see price relief if President-Elect Trump's to-be-seen policies boost demand without boosting supply."
  • "As mortgage rates continue to trend upwards, homebuyers in the costly coastal housing markets in California and the Northeast may get some relief. Rising rates will likely cool the fierce competition in these markets where inventory has been tightening and affordability has worsened."

About the Trulia Inventory and Price Watch
The Trulia Inventory and Price Watch offers buyers and sellers deeper insight into the change in supply and affordability of homes over the past year, within three different segments of the market: starter homes, trade-up homes, and premium homes. Based on the for-sale homes listed on Trulia, this report calculates housing inventory within each segment nationally and in the 100 largest U.S. metros, from Dec. 1, 2015 to Dec. 1, 2016. For the full report and methodology, see here.

About Trulia
Trulia® is a vibrant home shopping marketplace, focused on giving homebuyers, sellers, and renters the information they need to make better decisions. On mobile and the Web, Trulia provides house hunters with insights and unique information about properties, neighborhoods, and real estate agents. Additionally, Trulia offers data and information about schools, crimes, commute times, and the real estate market.

Launched in 2005, Trulia is based in San Francisco and is owned and operated by Zillow Group (NASDAQ: Z and ZG).

Trulia is a registered trademark of Trulia, LLC.

MEDIA CONTACT:
Daisy Kong
pr@trulia.com
415-400-7391

 

SOURCE Trulia


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