Zillow: Inventory Shrinking, California Metros Depleting Fastest
By: Esther Cho
Sellers may begin to have the upper hand in the market as housing inventory shrinks, leaving first-time homebuyers left to compete with investors, a report from Zillow revealed.
“First-time homebuyers are being squeezed out of the market by falling inventory and the rapid influx of investors looking to buy basic homes to rent out to the growing population of people who have recently been foreclosed upon,” said Stan Humphries, Zillow chief economist, in a release Thursday. “Investors are paying in cash and can close sooner, which is more favorable to banks and homeowners looking to sell.”
Inventory across all price levels fell 19.4 percent year-over-year as of September 30, according to Zillow analysis, which tracked the number of homes listed for sale on its site.
Among the 30 largest metros, California cities saw the biggest annual reduction in inventory. When looking at changes across all tier levels (bottom, middle, and upper), Sacramento led with a 42.4 percent decline, with San Francisco ranking second after seeing inventory drop 42.2 percent. San Diego was third due to its 40.7 percent decrease.
Cincinnati saw the smallest yearly decline across all inventory tiers, falling 9.5 percent, followed by Portland (-10.8 percent), and St. Louis (-14.5 percent).
Surprisingly, the inventory category that declined the most on a yearly basis was upper tier homes, which fell by 22 percent, while lower tier homes fell 15.3 percent.
Phoenix ranked highest among the 30 metros for having the steepest drop in inventory for homes priced in the bottom tier. In Phoenix, bottom tier inventory plummeted 57.1 percent. Following Phoenix, California cities were most notable, leading with Sacramento, where bottom tier inventory fell 55.4 percent, then San Francisco (-53.2 percent), San Jose (-47.5 percent), and San Diego (-45.4 percent).
Declines in the upper tier category weren’t as dramatic, with Kansas City, Missouri leading with a 42.7 percent drop, followed by San Francisco (-35 percent) and Miami (-34.4 percent).
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