Zillow reports that fewer homes priced to accommodate first-time homebuyers are coming onto the market and that those few that do make it are just as likely to be snapped up by investors looking to turn those properties into rentals for the very people who are being displaced, either by foreclosure or by their inability to secure financing for homes in higher pricing tiers. Investors pay in cash and have an easier time closing deals, which leaves traditional homebuyers in second place in the eyes of sellers who are usually banks that are more interested in saving money through streamlined transactions. For more on this continue reading the following article from Property Wire.
The inventory of lower priced homes for sale, which are commonly sought by first time buyers, has dropped by more than 40% in California over the past year, according to a new analysis.
The report, which tracks changes in the number of homes listed for sale on Zillow across the country as of the end of September 2012 and compares inventory changes in the bottom, middle and upper tiers of home prices, found that California has the highest annual rate of inventory reductions across all three housing tiers.
Overall it has seen a decline of 37.5% but the inventory in the bottom tier of homes saw the biggest decline of 42.7%. Lower priced homes in the Fresno metro fell by 59.7%, in Sacramento by 55.4%, in San Francisco by 53.2% and in Modesto by 50.5%.
These homes commonly are purchased by first time buyers and, more recently, investors. Nationally, the bottom price tier has experienced an inventory reduction of 15.3% over the past year.
‘First time buyers are being squeezed out of the market by falling inventory and the rapid influx of investors looking to buy basic homes to rent out to the growing population of people who have recently been foreclosed upon,’ said Stan Humphries, Zillow chief economist. ‘Investors are paying in cash and can close sooner, which is more favourable to banks and homeowners looking to sell,’ he added.
Nationally, inventory rates have dropped by one fifth, some 19.4% across all homes with inventory declining the most in higher priced homes, down 22%.
In the largest 30 metro areas, inventory across all tiers has fallen the most in Sacramento, and San Francisco where it is down 42.4% and it is down 40.7% in San Diego. It has fallen the least in the Cincinnati, down 9.5%, down 10.8% in Portland, Oregon and down 14.5% in St. Louis, Missouri.
This article was republished with permission from Property Wire.