What’s on my mind? Well, really couldn’t put it more succinctly than what was written by Ralph McLaughlin, Trulia’s chiefeconomist. I would add that it has been my experience that many buyers’ expectations appear to be influenced more and more by the home buying reality TV shows they are watching. Come on folks, paint and carpeting. Really?
Homebuyers across the country continue to struggle with a historic shortage in homes available to purchase which has led to rising prices, multiple offers and reduced time on the market.
Highly selective buyers (particularly first-time home buyers with unreasonable expectations) are seeing homes vanish while they weigh the options over several properties that they are interested in.
Nationally, the number of homes on the market dropped for the eighth consecutive quarter in Q1, falling 5.1% from Q1 of 2016. And the inventory shortage continues to be most dire for more affordable homes.
Starter-home inventory fell by 8.7% year over year, while trade-up home inventory fell by 7.9%. Meanwhile, the stock of premium homes fell just 1.7% year over year.
“Recovering home values have proven to be a double-edged sword,” said Ralph McLaughlin, Trulia’s chief economist. “While homeowners across the country are thrilled to regain equity in their homes, many have not been in a hurry to trade up. This has added to the inventory gridlock that ties up would-be starter-home inventory from ever coming onto the market, further constraining supply and decreasing affordability.”
That disproportionate drop in starter-home inventory is making homeownership less and less affordable for first-time buyers. Right now, a typical starter home buyer would have to dedicate 38.3% of his or her monthly income to buy a home, Trulia found. That’s a 2.9% increase from last year.
The bottom line is that homebuyers need to have their mortgage ready and be able to put in an offer quickly. Chasing a home with more features or for a lower price may very well result in losing out in the market altogether.