Housing inventory is shrinking, still, according to the recently released Trulia Inventory and Price Watch for the fourth quarter of 2017. Across the board, in the premium, starter and trade-up tiers, inventory has tumbled 10.5 percent year-over-year—the most considerable drop-off since 2013.
The issue is most pervasive at the entry level, which accounts for just 22.9 percent of available inventory. To compare, higher-end, or premium, supply comprises 53.1 percent.
“While the number of premium homes on the market have seen a sharp fall, they continue to make up a larger share of the for-sale market, which spells trouble for first-time homebuyers,” says Ralph McLaughlin, chief economist at Trulia. “Coupled with record-low inventory, saving enough money for a down payment will continue to be their biggest obstacle to homeownership.”
Affordability, as such, has dwindled. Buying a starter home necessitates 39.8 percent of monthly income, up 1.7 percent from the fourth quarter of 2016; buying a trade-up or premium home requires 25.8 percent and 14.0 percent, respectively.
The crisis could take a turn, however.
“While the inventory crunch continues, I’m cautiously optimistic that 2018 will be a year for inventory rebound,” McLaughlin says. “Not only is American optimism about selling homes at levels not seen since 2014, 16 percent of homeowners plan to sell a home in the next two years. If we see them follow through, there may finally be an uptick in inventory.”
For more information, please visit www.trulia.com.
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