Photo: Robert Clark
There weren’t enough starter homes on the market in NYC in the second quarter of 2017 to meet homebuyer demand as the availability gap between entry-level and pricy luxury homes widened.
This created a market mismatch — where homebuyers’ interests don’t line up with what’s available on the market, according to a report released earlier this week by the listing site Trulia.
Over the last year, New York City’s mismatch rating grew by one percentage point to 8.7 percent in the second quarter of 2017. Some 35 percent of all NYC home searches on Trulia were for starter homes, but only about 31 percent of all listings are starter homes, says Trulia.
At the same time, the national housing market’s mismatch rating increased 5.5 percentage points to 14.7 percent in the second quarter.
The national mismatch gap has grown as the share of starter home listings fell from 46.5 percent in the second quarter of last year to 45.8 percent in the second quarter of this year. Concurrently, searches for starter homes rose 5 percentage points to 60.5 percent, according to Trulia’s data.
“At the same time that premium listings are saturating the market nationally, searches for starter and trade-up are making up a larger share of all search activity,” says Trulia in the report.
And, the abysmally low supply of starter homes is creating challenging market conditions for first-time homebuyers.
At the other end of the market, luxury or “premium” homebuyers are finding more choices and far less competition at that price point. Luxury homes are typically priced at and above $4 million. Currently, there is a nearly 15 percentage point surplus of luxury listings relative to search interest nationwide, says Trulia.
Meantime, in NYC there is a nearly 9 percentage point surplus of luxury listings compared to searches.
To generate its rating for each of the top 100 US metros, Trulia used a scale of 0 to 100, with 0 being perfectly matched and 100 being completely mismatched.
The rating is the measure of the difference between the price points where searches occur and the price points of listed properties. For example, if all property searches occurred in the entry level category but all listings were in the luxury category, the market would be a complete mismatch with a score of 100.
Click here to read the entire report.