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Premium Housing Hit by Inventory Shortages

Housing inventory shortages have been one of the big stories in 2017, and it remains to be seen whether 2018 provides much relief. Now a new report by Trulia explores how the inventory crunch is hitting not just starter and mid-size homes, but the availability of premium homes as well.

In a new blog post, Trulia reveals that the supply of premium homes is now falling faster than any period since Q2 2013. During the year between Q4 2016 and Q4 2017, home inventory as a whole decreased 10.5 percent, the biggest decline since Q2 2013. Premium homes alone, however, have seen a 5.9 percent drop in inventory.

The metros feeling the premium home shortage the most include San Jose, California (down 41.7 percent); Salt Lake City, Utah (down 38.1 percent); and Rochester, New York (down 30.5 percent).

Unsurprisingly, shortages are continuing to drive up home prices as well. According to Trulia, last quarter’s listings hit new records of unaffordability. For a starter home, a potential homebuyer would have to pay an average of 39.8 percent of their monthly income to afford a house. In trade-up homes, that percentage is 25.8 percent, and in premium homes, it’s 14.0 percent.

Home inventory hit a post-Recession peak in Q3 2014. According to Trulia, both total and premium home inventory have slid to early-2013 rates of decline since then. “In 2012, homeowners were still reeling from the effects of the recession, with many selling their homes out of hardship,” Trulia says. “As the recession eased, inventory dried up in 2013, leading to the sharp year-over-year drop in that year. The drop we’re seeing now is approaching 2013 rates, but inventory levels are already lower than 2013 levels due to steady declines across the last three years.”

In spite of these shortages, Trulia is cautiously optimistic about an inventory recovery in 2018. According to Trulia’s post, “In our end of the year survey, one in three Americans think 2018 will be a better year for selling a home than 2017, and that 16% plan to sell their home in the next two years. If these Americans put their home where their mouth is, we may finally see an uptick in inventory over the coming year.”

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has over 17 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. Wharton and his family currently reside in Arlington, Texas. He can be reached at David.Wharton@thefivestar.com.
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