There is all-but-dried up inventory on the market—and, for buyers at the entry level, any available homes are likely priced out of reach, according to the March Zillow® Real Estate Market Report.
“This year’s home-shopping season is shaping up to be even crazier than last, and, sadly, the group that will have the hardest time is first-time and lower-income homebuyers,” says Dr. Svenja Gudell, chief economist at Zillow. “These buyers will be competing for the few entry-level homes on the market, which are also the ones appreciating the fastest because of extremely high demand.”
Inventory has dwindled down 8.6 percent in the past year, the report shows, and, of the available listings, 51.4 percent are priced in the top tier. By comparison, entry homes make up 21.9 percent of the supply. According to the Zillow Home Value Index (ZHVI), which gauges the median value, prices are up 8 percent year-over-year.
“One way to take the edge off would be an increase in inventory, but that is easier said than done,” Gudell says. “There are some signals a shift may be coming—construction activity is at its highest point in a decade—but buyers shouldn’t hold their breath.”
According to Gudell, in this feverish market, buyers need a professional at their side.
“Getting preapproved for a mortgage and finding an agent you trust can go a long way in helping buyers act quickly once the right home does become available in this otherwise tight and stressful housing landscape,” says Gudell.