Low-priced us homes "tough to find"

Photo credit: Michael Patrick

Rising stock has been welcomed by the US property market, as the country's real estate conditions become increasingly balanced and accessible to domestic house-hunters and investors have stepped down their activity.

Despite that, though, affordable homes are becoming harder to find, says Zillow's latest market report. The U.S. Zillow Home Value Index is up 6.4 percent from October 2013, its slowest annual pace of growth in more than a year, while there are 15.8 per cent more homes for sale now than one year ago, but the share of high-priced homes for sale is still growing much more quickly than low-priced homes.

Take Denver, for example. In October, there were almost four times as many homes available for sale in the Denver metro in the upper price tier (priced at $357,900 or more) than there were homes priced in the lowest price tier (less than $219,000).

"In many parts of the country, supply increased more among homes priced in the upper one-third of home values than among homes priced in the bottom and middle tiers," says Zillow Chief Economist Dr. Stan Humphries. "In other words, depending on their budget, individual buyers in the same market might be having completely different home buying experiences."

Reasons holding back growth in inventory at the lwo end of the market include the millions of homeowners still trapped in negative equity - although this is improving steadily - the fact that home builders tend to construct more expensive homes and fewer low value homes, and that many affordable homes have already been snapped up by investors ready to make a profit from renting them out.

"More homes on the market helps buyers in a number of ways," adds Humphries. "By offering buyers more choice; by creating competition among sellers, which can lead to price cuts and slower home value growth overall; and by giving prospective buyers the luxury of a little extra time to make their decisions. Unfortunately, because of the continued uneven nature of the recovery, not all buyers should expect to reap equal benefits from this yearlong ramp-up in inventory."