There is a shortage of starter homes for sale.
But, there’s not a shortage of new homes being built.
The issue with new homes is builders aren’t building starter homes.
Land is expensive. Development costs and the cost of material and labor are expensive, too.
Builders need to make a profit, and you can make more profit by selling expensive homes on small lots.
This is why you see new homes crammed in together so closely on tiny lots.
Sure, everyone would like a big yard and a nice house, but those are hard to find with new construction homes.
Any lower priced home (which would be a starter home), gets gobbled up quickly once it goes up for sale.
The sellers likely receive offers from lots of people looking to buy their first home.
These sellers then go look for their move up home.
They are good candidates to buy these builder homes, because these buyers have lots of money for down payment as they just sold their previous starter home for a big profit.
It’s like the small fish getting eaten by the medium fish, who in turn is eaten by the big fish.
If there aren’t enough small fish the whole cycle breaks down.
There is a lot of misconception about this issue.
Here’s an article I read just today.
The Zillow guy’s comments in the article are not well researched, either.
He states one year ago there were more houses for sale due to a stock market slump and spiking interest rates.
When I look at a graph of the Dow Jones Industrial Average from last year, I don’t see a slump.
Also, interest rates declined in 2019.
Declining interest rates normally lead to more people looking to buy a home.
When the Zillow guy says the recent slowdown in home values looks like it will reverse, I have to question what recent slowdown in home value growth he is referring to?
Is now a good time to sell your home?
That’s one item in this article I agree with.
As a seller you need to have a plan on where you are going to move to.
Thankfully the move up market is not as competitive as the starter home market.
Get your ducks in a row – find a good realtor and loan officer and you will be fine.