The past four quarters were rough for the starter home segment of the industry.
Trulia reports that starter home inventory decreased 12.1 percent from Q4 2015 to Q4 2016. Starter homes now make up less than a quarter of all available inventory nationwide. The shortage, along with high demand, has increased prices. First-time buyers now spend 39 percent of their monthly income to purchase a home, which is 1.9 percentage points more than last year.
Starter home unaffordability persists in a number of California markets such as Sacramento, Calif., Los Angeles, San Francisco, San Diego as well as Miami. These cities ranked in the top 10 annual declines in affordability for starter homes from 2012 to 2015 and remain in the top 10 for declines in affordability for starter homes from 2015 to 2016.
Tacoma, Wash., Portland, Ore., and Miami were among the markets that had the largest decrease in starter home affordability in 2016.