As Millennials move in to first-time buyer-starter homes, the existing occupants need to move up to move out. In some markets that is easier than others. In many locales that will be challenging given the huge price gap between starter and move-up homes and relative wages.
Starter homes in some markets are almost non-existent – just think of California and New York where housing is so expensive. Often in those locations, once a starter home is acquired, the price of the move-up property is out-of-reach of the lower-incomed homeowner (which for many in the U.S would be high-income earners relative to location). The ability to sell a move-up home is not just based on the new buyer, but also the ability of the seller to buy a higher-priced home. Hence the importance of an exit strategy.
This is a major constraint on listing inventory in many markets. Finding an affordable move-up home is a significant issue for many.
To analyze which markets are more challenging for potential move-up homebuyers, Realtor.com examined the 100 largest U.S. metros and looked at the following data points:
- Affordability of trade-up homes — measured by a percentage of income
- Starter vs trade-up home price gap
- Trade-up home price increase since 2014 — bigger increase equals lower new-buyer affordability
- Shrinking supply of trade-up homes since 2014 – greater the decline, the tougher to buy
- Percentage of homes with negative equity
- Days on the market
- Percentage of homes that owners have lived in the house for eight or more years – the average seller in 2016 lived in their home 7.88 years
So which markets in the U.S. rank the worst for potential move-up buyers according to the metrics of Realtor.com? The following table shows their findings, plus an added column of the latest 12-month job growth as of April 2017.
To read the original article click http://www.realtor.com/news/trends/your-first-home-might-be-your-last-where-trading-up-is-the-hardest/
Side Note
In the Realtor.com article the writer talks about moving out of their 10-year owned condo, two kids later and with a Capybara. Had no idea what a Capybara was and thus Goggled it. A Capybara is the world’s largest rodent from South America, two feet tall with adults weighing 77 to 150 pounds.
The big rodent is NOT happening in my house. Not even a hamperster. Yours?
Ted