Trading up from a starter home to a larger home has proven to be increasingly difficult for a growing group of homeowners across the country. Sure, owners may be able to snag a record-high price for their current home, but high prices and the low inventory are making it tough for them to buy something better in a tight market, realtor.com® notes.
“In today’s competitive landscape, moving up from [starter homes] to the white picket fence has become increasingly tough,” says Javier Vivas, manager of the realtor.com® research team. “This isn’t particularly unhealthy for the market, since it stops some irrational buyers. But it can leave out a large crowd of buyers who are financially ready.”
Indeed, the numbers are reflecting that. The number of repeat buyers dropped from 1.8 million to 2001 to 1 million in 2016, according to the Urban Institute. Repeat buyers include those who are trading up or downsizing into smaller but fancier home as well as those purchasing similar-sized homes elsewhere.
"After years of recovery, homeowners are slowly building up equity in their homes again,” says Bing Bai, a research associate at the Urban Institute. “But it's not necessarily as much as they need to afford a better home and a bigger mortgage.”
To pinpoint where trading up is proving to be the most problematic for home buyers, realtor.com® ranked the 100 largest U.S. metros based on factors like the price gap between starter and trade-up homes, the price increases of trade-up homes since 2014, the supply of trade-up homes since 2014, and more.
Homeowners may struggle the most trading up in these markets, according to realtor.com®:
1. Palm Bay, Fla.
- Median price of starter home: $148,000
- Median price of trade-up home: $329,900
- Price difference: 223%
2. Omaha, Neb.
- Median price of starter home: $97,000
- Median price of trade-up home: $314,200
- Price difference: 320%
3. Detroit
- Median price of starter home: $60,000
- Median price of trade-up home: $269,300
- Price difference: 449%
4. Honolulu
- Median price of starter home: $325,000
- Median price of trade-up home: $875,000
- Price difference: 269%
5. Seattle
- Median price of starter home: $254,900
- Median price of trade-up home: $549,900
- Price difference: 216%
6. Tucson, Ariz.
- Median price of starter home: $148,000
- Median price of trade-up home: $300,000
- Price difference: 203%
7. San Jose, Calif.
- Median price of starter home: $599,000
- Median price of trade-up home: $1,186,500
- Price difference: 198%
Source: “Stuck With a Starter Home? 10 Places Where Trading Up Is Toughest,” realtor.com® (May 22, 2017)
