Massive Inventory Shrinkage Hits First-Time Homebuyers in California
In Fresno, Sacramento, San Francisco and Modesto Metro Areas, Lower-Priced Inventory Falls by More than Half, According to Zillow Analysis
SEATTLE, Oct. 11, 2012 /PRNewswire/ -- The inventory of lower-priced homes for sale, which are commonly sought by first-time homebuyers, has dropped by more than 40 percent in California over the past year, according to a new Zillow analysis, which tracks changes in the number of homes listed for sale on Zillow across the country as of Sept. 30, 2012 and compares inventory changes in the bottom, middle and upper tiers of home prices.
California has the highest annual rate of inventory reductions across all three housing tiers (-37.5 percent), but the inventory in the bottom tier of homes saw the biggest decline (-42.7 percent); with lower-priced homes in the Fresno (-59.7 percent), Sacramento (-55.4 percent), San Francisco (-53.2 percent) and Modesto (-50.5 percent) metros seeing the largest annual reductions. These homes commonly are purchased by first-time homebuyers and, more recently, investors. Nationally, the bottom price tier has experienced an inventory reduction of 15.3 percent over the past year.
"First-time homebuyers are being squeezed out of the market by falling inventory and the rapid influx of investors looking to buy basic homes to rent out to the growing population of people who have recently been foreclosed upon," said Stan Humphries, Zillow chief economist. "Investors are paying in cash and can close sooner, which is more favorable to banks and homeowners looking to sell."
National Inventory Rates Decline, But Less Dramatically
Nationally, inventory rates have dropped by one-fifth (-19.4 percent) across all homes with inventory declining the most in higher-priced homes (-22 percent).
In the largest 30 metro areas, inventory across all tiers has fallen the most in the Sacramento (-42.4 percent), San Francisco, (-42.4 percent) and San Diego (-40.7 percent) metros; and has fallen the least in the Cincinnati (-9.5 percent), Portland, Ore. (-10.8 percent) and St. Louis, Mo. (-14.5 percent) areas.
Coming this Friday, "California's Housing Market: Navigating the Post-Bottom Landscape"
Later this week, Zillow and the University of Southern California Lusk Center for Real Estate are hosting a forum in San Francisco entitled, "California's Housing Market: Navigating the Post-Bottom Landscape." The forum will feature a distinguished group of speakers and panelists who will discuss and debate the housing market's "new normal" and whether it is a good time to buy, and take stock of housing-related tax issues including California's Proposition 13 and the mortgage interest deduction.
Additional event information and a full agenda can be found here: http://www.zillow.com/blog/category/housing-forum/. A live video webcast of the forum will also be made available Friday at 8 a.m. Pacific at that URL.
About Zillow, Inc.
Zillow (NASDAQ: Z) is the leading real estate information marketplace, providing vital information about homes, real estate listings and mortgages through its website and mobile applications, enabling homeowners, buyers, sellers and renters to connect with real estate and mortgage professionals best suited to meet their needs. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Stan Humphries. Dr. Humphries and his team of economists and data analysts produce extensive housing data and research covering more than 350 markets at Zillow Real Estate Research. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace, Zillow Mobile, Postlets®, Diverse Solutions ® and Zillow Rentals. The company is headquartered in Seattle.
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[i] Inventory changes refer to the difference in the number of homes listed for sale on Zillow across the country from Sept. 30, 2011 to Sept. 30, 2012.