The spring homebuying season may be long gone but that doesn’t mean first-time buyers should wait another 6 months to start looking.
A report from Trulia looked at the supply of starter, trade-up and premium homes across the 100 largest metros and found that starter homes inventory will increase typically around 7% in the fall; while prices decline 4.8% in the winter compared to the spring.
The strongest season for starter homes in 70 of the 100 largest metros is between October and December. Seven of the top 10 metros to see the swing in inventory and prices are in the West, specifically California, Colorado, Oregon and Arizona.
“Starter homebuyers should begin looking now. 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,” said Trulia senior economist Cheryl Young.
San Jose has the largest swing in starter homes inventory between the peak of the fourth quarter and the low of the first, at 42%.
OK. I should have linked to this Merc article instead. More details:
San Jose’s is the largest percentage spike in the nation, when averaged over those five years. San Francisco ranks fourth, with 33.7 percent more starter homes available in the fourth quarter. Nationally, starter-home inventory tends to increase 7.0 percent in the fourth quarter, compared to the peak season.
Yet the reality behind the percentage figures can be sobering.
On average, only 332 starter homes have been offered for sale in the entire San Jose metro area (defined as Santa Clara and San Benito counties) in the third quarter of 2017. That was down from 655 a year earlier, a 49.3 percent drop. Trulia’s numbers include all kinds of starter homes: new and existing single-family homes, condominiums and townhouses.
Likewise, the supply of starter homes stood at 230 in the San Francisco metro area (San Francisco and San Mateo County) in the third quarter of 2017, down from 396 in the same quarter in 2016, a 72.2 percent fall-off.
In the Bay Area, it’s not just first-time buyers who compete for starter homes, Young pointed out. It’s also investors and aging downsizers. The so called trade-up market has shriveled, because so many sellers find they can’t afford a larger home if they want to stay in the Bay Area.
All of this helps explain why a house measuring less than 2,000 square feet recently sold in Sunnyvale for $2,470,000 — nearly $800,000 above its listing price.
So what exactly is a starter home these days, and who can afford it?
They keep talking about that Sunnyvale house. Can’t get over the shock…
The sunnyvale house was purchased for $2.47 mil.
If it is on a golden ratio rectangular lot, wasn’t that bad.
Land cost = $170/ sqft, so 13,000 sqft lot > $2.2 mil which mean only paid ~ $270k for the structure.
Looking from another angle, the structure should worth $470k, so he paid $153/ sqft for the odd shape lot.
Sound a little expensive for the odd shape lot.
The house faces East and is favored by many Indians :), and in a cul-de-sac which is loved by those who have children.
Can’t get over the shock…