Trulia: Buyers Face Tough Spring Market As Move-In Ready Starter Homes Become Harder To Find, Pricier, Smaller, And Older

Starter Homes Becoming Non-Starter for Many Buyers
Not only will first-time buyers face fierce competition in a tighter and pricier housing market, the quality of available starter homes appears to have diminished. Today, starter homes are less likely to be move-in ready with fixer-uppers making up 11.2% of the market, up from 10.3% in 2012. Most notably, Camden, N.J, Philadelphia, and Oklahoma City saw their share of fixer-uppers among starter homes rise the most. Moreover, starter homes nationally are nine years older on average and about 2% smaller in terms of square footage, shrinking to 1,187 square feet from 1,211 square feet six years ago.

Starter Homes Completely Out of Reach in San Francisco Bay Area, Los Angeles, and Orange County
The ongoing inventory crunch continues to impact affordability across the country. Nationally, starter-home buyers now need to spend at least 41.2% of their income to buy a typical starter home – significantly more than the recommended amount. This 4.2 percentage point increase is the largest year-over-year rise on record. Regionally, California is home to the most unaffordable markets in the country. In fact, starter-home buyers in San Francisco, San Jose, Calif., and Los Angeles would need to spend more than 100% of their income to buy the median-priced starter home in those markets.

Quotes from Trulia's Senior Economist Cheryl Young:

• "First-time home buyers face a perfect storm this spring. Affordable, move-in ready starter homes have become harder to find amid rising home prices and mortgage rates. While new home construction hit a 10-year high in 2017, these units have not translated into starter home inventory just yet."
• "If you're looking to buy a fixer upper, proceed with caution. It may seem like a reasonable starter home but may be a trade-up home in disguise. In tight markets where bidding wars are common, sellers have little incentive to upgrade their properties before listing them. First-time homebuyers should keep that in mind as they assess the hidden costs that comes with fixing up a home, especially if it's an older home."

Methodology
The Trulia Inventory and Price Watch offers buyers and sellers deeper insight into the change in supply and affordability of homes, 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 Jan. 1 to March 1, 2018. In the deeper analysis of starter homes, metro level characteristics such as square footage and age of home are reported as medians while national metrics are weighted averages of the 100 largest metropolitan areas. Fixer-uppers were identified using property listings descriptions that used terms such as "fixer," "as-is," "needs work," "deferred maintenance" and "TLC." For the full report and methodology, see here.

About Trulia
Trulia's mission is to build a more neighborly world by helping you discover a place you'll love to live. Homebuyers and renters use Trulia's website and suite of mobile apps to get a deeper understanding of homes and neighborhoods across the U.S. through personalized recommendations, insights sourced straight from locals, and 34 different map overlays that offer details on commute, reported crime, schools, nearby businesses, and more. Founded in 2005, Trulia is based in San Francisco, and owned and operated by Zillow Group, Inc. (NASDAQ: Z and ZG). Trulia is a registered trademark of Trulia, LLC.

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