Massive Inventory Shrinkage Hits First-Time Homebuyers in California

SEATTLE, Oct. 11, 2012 /PRNewswire/ — The inventory of lower-priced homes for sale, which are commonly sought by first-time homebuyers, has dropped by more than 40 percent in California over the past year, according to a new Zillow analysis, which tracks changes in the number of homes listed for sale on Zillow across the country as of Sept. 30, 2012 and compares inventory changes in the bottom, middle and upper tiers of home prices.

California has the highest annual rate of inventory reductions across all three housing tiers (-37.5 percent), but the inventory in the bottom tier of homes saw the biggest decline (-42.7 percent); with lower-priced homes in the Fresno (-59.7 percent), Sacramento (-55.4 percent), San Francisco (-53.2 percent) and Modesto (-50.5 percent) metros seeing the largest annual reductions. These homes commonly are purchased by first-time homebuyers and, more recently, investors. Nationally, the bottom price tier has experienced an inventory reduction of 15.3 percent over the past year.

“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. “Investors are paying in cash and can close sooner, which is more favorable to banks and homeowners looking to sell.”

Annual Inventory Changes[i] – California
Metro Area Bottom Tier Middle Tier Upper Tier All Homes
State of California -42.7% -37.4% -31.9% -37.5%
Bakersfield, Calif. -20.2% -42.5% -34.0% -33.4%
Fresno, Calif. -59.7% -55.2% -40.4% -49.4%
Los Angeles -45.1% -37.9% -29.2% -37.1%
Modesto, Calif. -50.5% -44.4% -33.6% -41.0%
Riverside, Calif. -44.2% -43.8% -30.5% -38.7%
Sacramento, Calif. -55.4% -48.0% -28.4% -42.4%
San Diego -45.4% -44.6% -33.0% -40.7%
San Francisco -53.2% -42.8% -35.0% -42.2%
San Jose, Calif. -47.5% -35.9% -32.7% -38.4%
Stockton, Calif. -48.7% -49.2% -39.3% -44.8%
Ventura, Calif. -42.1% -34.4% -31.0% -34.8%

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