In Recovering Housing Market, the Starter Home Remains Elusive #investment #realestate

Source:  Reuters

Low interest rates and an improving job market value have created a wave of prospective first-time home buyers, but they're being stymied by a dearth of available starter homes.  Nationwide, the inventory of homes costing $250,000 or less fell more than 12 percent between June 2015 and June 2016, according to the National Association of Realtors.

Making Sense of the Story:

- The shortage stems from higher labor, land and building permit costs that have caused construction companies to focus on higher-end homes that bring more profit.

- In addition, institutional investors are snapping up affordable homes by the thousands in select markets nationwide and converting them to rentals.

- Over the past four years, the number of entry-level homes for sale, defined as those priced in the lower third of a local market, has fallen by 34 percent - according to a Reuters analysis of data compiled by listings firm Trulia.

- The market is even tighter in many cities.  In Salt Lake City the average number of starter homes on the market has fallen by 83% since 2012, and in San Diego by 71.5 percent.  Cambridge, Mass. and Portland Ore. have both seen drops of more than 60%.

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