First-time home buyers can expect an easier home shopping experience this spring, as market conditions shift in their favor, welcome news for buyers who have struggled to break into the market.
Entry-leveli home values are growing at their slowest pace since mid-2016, giving first-time home shoppers a little more breathing room during the home search process, according to RealEstate.com‘s Entry-Level Market Report. At the same time, inventory is showing consistent positive growth, which means that buyers will have more choices and likely face less competition when looking for the right home.
For the past several years as the market recovered from the housing crash, rapid home value appreciation and falling inventory created steep competition and expensive buying environment, keeping many first-time buyers on the sidelines. Record-high rents and not being able to use profits from a previous home sale made coming up with a down payment – the biggest hurdle for renters wanting to become homeownersii – even harder for new buyers.
The typical entry-level home is worth $130,200, up 9.2 percent from a year ago. This is the slowest pace of annual appreciation on record since June 2016. Last February, entry-level homes were gaining value at a 12.5 percent annual pace. Forty-two of the 50 largest U.S. metros saw slower entry-level home value appreciation compared with a year ago. Jacksonville and Tampa, Florida saw the biggest declines in appreciation, with each slowing by more than 16 percentage points from breakneck paces of more than 25 percent a year earlier, but both markets are still appreciating faster than the national average.
The number of entry-level homes on the market is also on the rise, which may be contributing to the slowing pace of appreciation. Entry-level inventory rose 4.1 percent over the past year, marking the seventh straight month of growing inventory – a sign that this is a real shift in the market, rather than a temporary change. Prior to this growth, the number of entry-level homes for sale had fallen on a year-over-year basis for nearly four years.
Salt Lake City and San Jose saw the biggest increases in entry-level inventory, up 67.2 percent and 60.1 percent, respectively.
“Buying a home for the first time is an incredibly exciting yet extremely stressful time,” said RealEstate.com General Manager Justin LaJoie. “Potential buyers who tested the waters in recent years should have an easier time now, which should be especially good news for anyone who made an offer but lost their bid for a home. First-time buyers can give themselves an extra boost by being well-informed, prepared buyers. And the work they do – contacting more agents, doing more research and visiting open houses – should pay off this year.”
For first-time buyers trying to understand what they can afford, RealEstate.com’s All-In Monthly Price allows them to search based on their monthly housing budget and down payment savings. Zillow Group designed the RealEstate.com search experience to give first-time buyers more transparency and a better understanding throughout the home search process.
Zillow Group, Inc. (NASDAQ: Z) (NASDAQ: ZG) houses a portfolio of the largest real estate and home-related brands on mobile and the web, which focus on all stages of the home lifecycle: renting, buying, selling and financing. Zillow Group is committed to empowering consumers with unparalleled data, inspiration and knowledge around homes, and connecting them with great real estate professionals. The Zillow Group portfolio of consumer brands includes Zillow®, Trulia®, Mortgage Lenders of America, L.L.C. (MLOA), StreetEasy®, HotPads®, Naked Apartments®, RealEstate.com and Out East®. In addition, Zillow Group provides a comprehensive suite of marketing software and technology solutions to help real estate professionals maximize business opportunities and connect with millions of consumers. Zillow Offers™ provides homeowners in some metropolitan areas with the opportunity to receive offers to purchase their home from Zillow. When Zillow buys a home, it will make necessary updates and list the home for resale on the open market. Zillow Group operates a number of business brands for real estate, rental and mortgage professionals, including Mortech®, dotloop®, Bridge Interactive® and New Home Feed®. The company is headquartered in Seattle, Washington.
Zillow, Mortech, Bridge Interactive, StreetEasy, HotPads, Out East and New Home Feed are registered trademarks of Zillow, Inc. Zillow Offers is a trademark of Zillow, Inc. Trulia is a registered trademark of Trulia, LLC. dotloop is a registered trademark of DotLoop, LLC. Naked Apartments is a registered trademark of Naked Apartments, LLC. Mortgage Lenders of America, LLC is an Equal Housing Lender; NMLS 10287.
i Homes valued in the bottom-third of the overall housing stock
SOURCE Zillow Group
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