Market Mismatch in Providence

Market Mismatch in Providence

By Jennifer Riner, Trulia

There’s a reason homebuyers are stressed over the for-sale shortages sweeping the nation. As of the first quarter, the number of starter and trade-up homes in the United States tumbled 8.7 percent and 7.9 percent, respectively. Fewer homes at both the bottom- and mid-tier of the real estate market elicits understandable affordability concerns, many of which have already materialized in the last 12 months or so.

Thanks (in part) to tighter home supply, the average homebuyer is shelling out a larger portion of their salary on a home purchase in 2017. The share of income needed to buy a starter home is up 2.9 percent since 2016, while trade-up buyers must devote 1.6 percent more of their income toward home buying. In a somewhat ironic twist of fate, premium homebuyers – a group who presumably has the most wiggle room in the budget – faced the slimmest annual home spending climb. Luxury buyers now spend less than 1 percent more of their income toward homeownership compared to last year.

 

The national numbers are telling, but not all markets face similar conditions. Trulia’s Inventory and Price Watch demonstrates these gaps on a hyperlocal scale. Aptly titled the “market mismatch,” homebuyers – and sellers – can assess the top 100 metros in the United States based on their individual supply-demand disparity score.

 

Although considered middle-of-the-road in its market mismatch, Providence is no stranger to inventory inadequacies. Consider how Providence’s home buying conditions vary depending on budget:

 

Starter Homes

Out of all searches for Providence homes, 34.6 percent fell into the first-time homebuyer category at the time of Trulia’s analysis. Meanwhile, just 28.8 percent of Providence homes listed for-sale between October and December 2016 were considered starter homes. This left a market mismatch score of 5.7 percentage points.

 

Trade-Up Homes

At the same time, trade-up homes encompassed 26.4 percent of residential searches and 22.3 percent of homes for sale. The market mismatch within the trade-up home category was 4.1 percentage points in late 2016.

 

Premium Homes

While most cities have somewhat balanced supply and demand within the premium home category, Providence is an outlier. Last year, the market mismatch among upper tier homes came out to 9.8 percentage points – the highest out of any home category in Providence.

 

 

 

With an average total mismatch score of 6.5 percentage points across all price tiers, Providence isn’t the most imbalanced market in the nation, despite its minor irregularities. The more drastic market mismatch scores fall in the South – think Dallas, Charlotte and Daytona Beach.

 

Not even the steadiest markets are entirely flawless. For instance, Bakersfield has the lowest average mismatch score of all 100 metros surveyed, but is still slightly imbalanced at 1.4 percentage points.

 

Ready to buy a home? Use Trulia’s home affordability calculator to learn which home category suits your budget and prepare for a potential lack of inventory accordingly.