Trulia® on Wednesday released the findings from its quarterly Trulia Inventory and Price Watch, which found that starter-home buyers should accelerate their house-hunting plans now as for-sale inventory increases and listing prices decrease in the fall and winter months.
According to Trulia, starter-home buyers should ignore conventional wisdom about the spring home-buying season. Starter-home inventory peaks in October and actually rises 7% in fall months, compared to the spring. Regionally, the strongest season for starter homes in 70 of the top 100 housing markets is between October and December. That leads to listing prices that are about 4.8% and 3.1% lower in the winter and spring than in the summer, respectively.
Home buyers in the West should especially pick up their house hunting efforts as seven of the top 10 metros have the largest inventory and price swings are in California, Colorado, Oregon and Arizona. San Jose leads the pack with a 42% seasonal difference, on average, between its fourth quarter peak and first quarter low point in the number of starter homes on the market. For discounts, Wichita, Kan., offers the biggest savings. Listing prices there are 18.6%, on average, from its first quarter low point to its second quarter peak.
| Where and When Starter Homes Hit the Market | |||||
| Metros with Largest Seasonal Difference, Inventory | Metros with Largest Seasonal Difference, Listing Prices | ||||
| U.S. Metro | Seasonal Difference Between Non-Peak and Peak | Min (Max) Listing Count Quarter | U.S. Metro | Seasonal Difference Between Non-Peak and Peak | Min (Max) Listing Price Quarter |
| San Jose, CA | -42.0% | 1 (4) | Wichita, KS | -18.6% | 1 (2) |
| Colorado Springs, CO | -34.7% | 2 (4) | Seattle, WA | -12.1% | 1 (3) |
| Portland, OR | -34.7% | 2 (4) | San Jose, CA | -11.2% | 1 (3) |
| San Francisco, CA | -33.7% | 1 (4) | Oakland, CA | -10.4% | 1 (3) |
| Phoenix, AZ | -32.8% | 3 (1) | Denver, CO | -9.3% | 1 (3) |
| NOTE: Among the 100 largest U.S. metro areas. Full data set available for download here. |
The number of starter and trade-up homes on the market in summer declined 20.4% and 12.5% respectively, from the same period a year ago. But for premium home buyers, the inventory picture wasn’t as bleak—their segment declined 2.3% year-over-year. These drops follow the national trend, as inventory tumbled 9.1% year-over-year, marking the 10thstraight quarter of inventory declines.
For home buyers seeking affordable homes, premium home buyers only needed to spend 14.2% of their income, which was just a 0.7 percentage-point year-over-year increase. Meanwhile starter-home buyers and trade-up home buyers were again hit hard. Starter home buyers needed to shell out 39.7% of their monthly income to buy a typical starter home – up from 31% in the first quarter of 2013– while trade-up home buyers followed with 26% of their income needed to purchase a home in that segment.
| 2017 Q3 National Inventory and Price Watch | ||||||||
| Housing Segment | 2017 Q3 Inventory | Change, 2016 Q3 – 2017 Q3 | ||||||
| Median List Price | Share | Inventory | % of Income Needed to Buy Median Price Home in Segment | % Change in Median List Price | Percentage Point Change in Share | % Change in Inventory | Additional Share of Income Needed to Buy a Home (Percentage-Point Change) | |
| Starter | $171,624 | 20.5% | 236,942 | 39.7% | 6.5% | -2.5 pts | -20.4% | +2.3 pts |
| Trade-Up | $294,150 | 23.5% | 268,187 | 26.0% | 4.8% | -0.5 pts | -12.5% | +1.2 pts |
| Premium | $615,929 | 55.9% | 635,783 | 14.2% | 6.2% | +3.0 pts | -2.3% | +0.7 pts |
| Among the 100 largest U.S. metro areas. Share is the percent of for-sale homes that fall into each segment, which is defined separately for each metro. Median price for each segment is the stock-weighted average of the median price of each segment in each metro. Some point change estimates may be slightly different than stated values because our differing procedure occurs before rounding. The full data set can be downloaded here. |
“Starter-home buyers should begin looking now,” said Cheryl Young, senior economist at Trulia. “The fall season provides a great opportunity for finding the right home and neighborhood thanks to a bump in homes for sale on the market, followed by lower winter prices.”
