In 2017's fourth quarter, home inventory decreased by 10.5 percent. Homes across three price categories, starter, trade-up, and premium, are also severely unaffordable -- requiring 14 to 39.8 percent of monthly income to purchase a home.
Housing inventory diminished in 2013, causing a stark year-over-year drop. This year's inventory levels are already lower than 2013 levels, sliding for three years after a brief rise in 2014. In Trulia's end of the year survey, the data show that 16 percent of homeowners plan to sell their home in the next two years, and one in three respondents think 2018 will be a better year for selling a home than 2017, which may bring about an increase in inventory.
With the share of trade-up homes unchanged from this time last year – hovering at 24 percent — premium homes have started taking up market space once occupied by starter homes. So, even though premium homes are the most unaffordable they’ve been in years, they’ve also become a larger part of available inventory. If this trend persists, the market will become more and more saturated with homes that are unaffordable to even the top income brackets.
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