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What’s Happening to the Supply of Starter Homes?

In Austin, Texas, as well as many markets around the United States, finding a starter home is proving to be a difficult task.

There are several factors contributing to the low supply of affordable houses ready for first-time buyers, including:

  • Nearly 1/5 of all homes under $300,000 are owned by corporations and companies who rent them out
  • From June 2015 to June 2016, there’s been a greater than 12% decrease in the inventory of homes priced at $250,000 or less
    • labor, land and building permit costs have increased, so many construction companies are focusing on building more expensive homes
  • Case-Shiller U.S. National Home Price Index increased more than 25% between 2000 and 2014, while average hourly wages have fallen
  • Large-scale investors often outbid individual buyers when making their all-cash offers to purchase a home
  • Construction labor supply shortage is contributing to lower housing starts

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