There wasn’t much in the way of surprises for the housing market in the first quarter of 2016. Home values continued to appreciate quickly and the inventory continued to shrink, especially for entry-level and mid-level homes. Which means any entry-level or move-up homebuyers are likely to face some difficulties this spring buying season.
As Zillow reports, across the country median home values rose 4.8 percent year-over-year in March and 1.1 percent over the course of the first quarter. The Zillow Home Value Index stands at $186,200. Home values are rising quickest for entry-level and mid-market homes for the majority of the country’s biggest housing markets.
Overall, there were 5.9 percent fewer homes available nationwide after the first quarter than there were at the end of Q1 2015. While still trending in the wrong direction, this number doesn’t quite speak to how bad it is getting at the lower end of the market. The bottom and middle thirds of the market each fell by 10.4 percent while the top third of the market only fell by 1.9 percent. This means that the number of for sale homes is greatly skewed toward the top. When looking at the 35 largest housing markets in the country, the top third of the market has more available homes than either of the other markets and in nine of those metros the top third of the market accounts for more than half of all homes available for sale.
Compounding this issue is the fact that home value appreciation in the bottom tier is outpacing both mid- and top-tier appreciation in 18 of the 35 metro areas. In Phoenix, for example, bottom-tier home appreciation is growing at 11.2 percent while that number is only 4.2 percent for top-tier homes.
For the full report and to view accompanying graphs and charts, follow the link below.