It will get harder for first-time buyers

The number of homes available for the average first-time homebuyer saw its steepest year-over-year drop in three years, falling 12.1 percent since 2015, according to a Trulia study.

Moreover, these buyers need to pay 1.9 percent more of their income, on average, to buy a starter home in their local market.

Nationally, the overall housing inventory fell 9.1 percent year-to-year, with the biggest decreases in starter (12.1 percent decline) and trade-up (12.9 percent decline) inventory. Premium home inventory fell a more moderate 5.6 percent.

Starter homes also less affordable

Affordability continues to plague first-time homebuyers. Today, the average starter home buyer needs to spend 38.5 percent of their monthly income to buy a home – a 1.9 percentage point increase from last year.

The starter home affordability decline is more than twice as much as trade-up homes (up 0.9 percentage points) and nearly four times the amount needed to buy a premium home (up 0.5 percentage points). Comparatively, buyers of trade-up homes and premium homes would each need to spend just 25.5 percent and 13.9 percent of their income respectively to buy a home.

“Tight inventory will still be a big obstacle to homeownership in many markets in 2017, but I’m cautiously optimistic that we’ll see the bottom of the current housing shortage as the year progresses,” says Trulia Chief Economist Ralph Mclaughlin. “That said, buyers might not see price relief if President-Elect Trump’s to-be-seen policies boost demand without boosting supply.”

Source: Florida Realtors