Press Releases

First-Time Buyers Face Lack of Inventory and Higher Prices

Entry-level homes are rising in value the fastest in most large U.S. housing markets, making it tough for first-time buyers to enter the market this spring

- There are 5.9 percent fewer homes for sale in the U.S. than a year ago.

- There are 10.4 percent fewer entry-level homes for sale in the U.S. than a year ago.

- Low supply is driving up home prices among entry-level homes, which are often sought after by first-time buyers.

- National home values rose 4.8 percent to $186,200, according to the first quarter Real Estate Market Reports. Rents rose 2.6 percent to $1,389.

Apr 22, 2016

SEATTLE, April 22, 2016 /PRNewswire/ -- Home values are rising the fastest among entry-level homes in more than half of the largest U.S. housing markets, according to first quarter Zillow® Real Estate Market Reports.i Rising home values in this segment of the market can be attributed to a lack of supply, with 10 percent fewer homes for sale this year compared to last.

The median value of entry-level homes, those in the bottom thirdii of the market, rose the most over the past year in Denver, up 20 percent, followed by Portland and Dallas. There are 13 percent fewer entry-level homes available in Denver than there were a year ago. The number of entry-level homes available declined the most in Portland. There are 40 percent fewer entry-level homes available in Portland than there were a year ago.

The findings signal difficult times ahead for first-time homebuyers looking to enter the market. Going into home-shopping season this spring, buyers will find fewer homes in the bottom and middle of the market -- the homes most affordable for first-time buyers. The trend also highlights the different experiences buyers are having in the recovering housing market. Buyers looking for the most expensive homes will find slower price growth, a larger selection, and less competition this spring than entry-level buyers who are likely to face stiff competition, bidding wars, and very few homes to choose from.

"It's going to be a tough home-buying market this spring, especially for first-time buyers or even people looking to move up into a slightly more expensive home," said Zillow Chief Economist Dr. Svenja Gudell.  "In order to stand out in a competitive market, buyers should get pre-approved for a loan, find an agent who has experience with bidding wars, and consider coming in at the asking price, so the seller knows they're serious."

In all of the largest U.S. housing markets, more than a third of the homes available for sale are in the most expensive segment -- in the top third of the overall housing stock in the market. In nine markets, top-tier homes make up more than half of the inventory.

The most expensive homes on the market are more likely to have a price cut, a signal that there's less demand for top-tier homes. The share of top-tier listings with a price cut has increased 1.6 percentage points over the past year.

Metropolitan
Area

First Quarter
2016 Zillow
Home Value
Index (ZHVI)

Bottom-
Tier
Percent
Home
Value
Increase

Bottom-
Tier
Percent
Inventory
Change

Middle-
Tier
Percent
Home
Value
Increase

Middle-
Tier
Percent
Inventory
Change

Top-Tier
Percent
Home
Value
Increase

Top-Tier
Percent
Inventory
Change

United States

$        186,200

n/a

-10.4%

n/a

-10.4%

n/a

-1.9%

New York, NY

$        384,100

-0.8%

-9.0%

1.8%

-3.6%

3.5%

4.7%

Los Angeles-Long Beach-Anaheim, CA

$        565,400

6.2%

-26.3%

6.2%

-11.3%

8.1%

1.3%

Chicago, IL

$        193,800

0.7%

-14.2%

3.1%

-10.5%

1.0%

2.0%

Dallas-Fort Worth, TX

$        182,100

14.7%

-27.5%

13.0%

-32.5%

11.2%

-10.1%

Philadelphia, PA

$        204,400

0.9%

-2.0%

1.9%

-6.4%

1.3%

0.5%

Houston, TX

$        172,100

7.7%

 n/a

6.4%

 n/a

2.8%

 n/a

Washington, DC

$        364,100

2.8%

-10.8%

2.0%

-0.7%

1.0%

2.7%

Miami-Fort Lauderdale, FL

$        230,600

11.7%

-3.6%

10.5%

7.8%

6.3%

15.4%

Atlanta, GA

$        163,000

7.3%

-11.5%

6.3%

-11.9%

5.5%

1.3%

Boston, MA

$        387,400

3.2%

-13.1%

4.9%

-4.8%

4.5%

14.6%

San Francisco, CA

$        806,600

11.0%

-17.7%

11.5%

-6.7%

12.1%

1.7%

Detroit, MI

$        123,100

-3.2%

2.0%

6.4%

-20.6%

2.8%

-3.6%

Riverside, CA

$        304,200

10.0%

-3.8%

6.9%

-11.8%

2.7%

1.7%

Phoenix, AZ

$        219,200

11.2%

-28.5%

8.4%

-11.6%

4.2%

-5.3%

Seattle, WA

$        382,700

12.6%

-32.4%

11.7%

-24.4%

10.7%

-16.8%

Minneapolis-St Paul, MN

$        219,400

5.2%

-7.9%

4.5%

-12.8%

2.1%

4.2%

San Diego, CA

$        506,100

6.0%

-25.5%

5.7%

2.3%

5.2%

3.9%

St. Louis, MO

$        141,900

2.3%

-3.0%

5.5%

-10.9%

5.4%

-6.6%

Tampa, FL

$        163,600

10.3%

-28.1%

8.9%

-20.4%

6.2%

-12.4%

Baltimore, MD

$        244,800

1.3%

-3.9%

1.5%

-3.9%

0.6%

-3.2%

Denver, CO

$        333,500

20.3%

-12.7%

15.7%

5.4%

10.6%

-12.7%

Pittsburgh, PA

$        126,700

2.9%

8.6%

1.8%

1.7%

3.0%

9.3%

Portland, OR

$        322,000

16.2%

-39.5%

14.8%

-38.7%

13.5%

-19.7%

Charlotte, NC

$        159,800

4.3%

-34.7%

5.1%

-34.5%

4.4%

-16.6%

Sacramento, CA

$        339,700

13.0%

-22.3%

8.7%

-21.2%

7.1%

-8.6%

San Antonio, TX

$        150,200

8.2%

 n/a

6.7%

 n/a

4.5%

 n/a

Orlando, FL

$        184,100

7.9%

-23.1%

7.9%

-16.0%

4.7%

-4.8%

Cincinnati, OH

$        143,400

4.0%

-18.2%

3.9%

-20.0%

2.9%

-9.1%

Cleveland, OH

$        125,500

-1.3%

-7.9%

2.5%

-11.0%

2.2%

0.8%

Las Vegas, NV

$        203,200

9.1%

-11.1%

9.2%

-8.3%

5.8%

6.8%

Columbus, OH

$        154,600

4.8%

-24.1%

5.7%

-13.7%

4.2%

-3.0%

Indianapolis, IN

$        130,200

2.9%

-8.7%

2.7%

-22.4%

3.7%

-11.8%

San Jose, CA

$        956,500

10.5%

-14.2%

12.6%

1.5%

12.1%

7.5%

Austin, TX

$        247,500

10.1%

 n/a

8.7%

 n/a

6.8%

 n/a

Virginia Beach, VA

$        210,900

0.2%

1.1%

1.1%

2.4%

1.1%

0.0%

 

About Zillow 
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

i The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data
ii
Homes in each metropolitan region are assigned to the bottom, middle or top tier of homes based on their estimated home value. Each tier contains one-third of the homes in the metro region, and the thresholds defining each tier are computed separately for each metro.

 

SOURCE Zillow

For further information: Jordyn Lee, Zillow, press@zillow.com