The starter home inventory in the DC area continues to drop.
A recent Trulia report shows that last year the number of starter homes in the DC area market had the smallest increase of three sub-sectors -- starter, trade-up and premium homes -- with the stock of starters rising by just 8.6 percent. Consequently, starter homes are a smaller share of the overall market, dropping year-over-year from 29.7 percent of the supply to 25.5 percent.
The median price for starter homes also increased by 9.3 percent year-over-year, hitting $235,000 and requiring buyers to spend 35.8 percent of their income on housing compared to 32 percent in the first quarter of 2017. Buyers of trade-up and premium homes have spent a relatively steady share of their income on housing, at 23.4 percent and 12.9 percent respectively.
For DC-area buyers, the median listing price for starter homes increased from $149,930 in 2012 to $235,000 in 2018 while the quantity of starter homes decreased from 5,455 to 3,417 over the same period. Further constraining the availability and affordability of starter homes on the market for first-time buyers is the prevalence of fixer-uppers on the market, putting these buyers in competition with investors or requiring funds beyond the purchase price to pay for extensive repairs.
Trulia defines starter, trade-up and premium homes based on an estimate of the home value of aggregate housing stock, which is then divided into three sectors. Affordability is calculated based on median household income terciles and what it would require to purchase the median-priced home associated with that tercile.
This article originally published at https://dc.urbanturf.com/articles/blog/more-starter-homes-are-fixer-uppers/13741.
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