The selling season is in full swing. Prices are rising, inventories are tightening, and interest rates are increasing, making it harder this spring for homebuyers to purchase their first home or trade up into their next home. Adding to these challenges, in many markets, home searches are out-of-sync with the available inventory. Real estate marketplace, Trulia, semi-annually explores this predicament in its Mismatched Market report.
In its most recent report, Trulia notes that there is a nationwide average mismatch score of 7.4, a rise of 1.8 percentage points from the previous report (the average of the gap between searches and inventories regardless of direction). Coastal Virginia residents and future residents should breathe easy knowing their house hunting experience might be a little calmer than it is in other metropolitan markets. The CoVa average mismatch score is 4.8, about a third lower than the national gap.
Nationally, prospective homebuyers searching for a starter home or a trade-up home may experience an uphill battle to find homes that fit their budget and expectations. The national gap for these home types is -5.7 percentage points and -5.3 percentage points respectively. Homebuyers hoping to snag a premium home have a surplus of options, as the gap for this home type is +11 percentage points.
|National Searches vs. Inventories|
|Home Type||% of Searches||% of Inventories||Gap|
The worst matched markets in the nation are Dallas, TX, Houston, TX and Charlotte, NC. Dallas has an average mismatch score of 17.5. Houston is a close second with a mismatch score of 17.3. Charlotte’s mismatch score is slightly better at 15.1.
In each of these markets, there is a significant shortage of starter and trade-up homes. For instance, searches for starter homes in Dallas account for 18.1 percent of all searches yet starter homes comprise 6.2 percent of the available inventory. In Houston, there is a -14.7 percentage point gap between searches and inventory. More than 75 percent of all listing are premium in both of these markets. Fortunately, in Coastal Virginia all gaps between inventory and searches are in the single digits.
Top Five Mismatched Markets
|U.S. Metro||% of All Searches For Starter Homes
|% of All Listings That Are Starter Homes
|Starter Home Market Mismatch Score (Percentage Point Gap)||% of All Searches For Trade-Up Homes
|% of All Listings That Are Trade-Up Homes
|Trade-Up Home Market Mismatch Score (Percentage Point Gap)||% of All Searches For Premium Homes
|% of All Listings That Are Premium Homes
|Premium Home Market Mismatch Score (Percentage Point Gap)|
|Fort Worth, TX||19.5%||9.6%||-9.9||28.9%||17.3%||-11.5||51.7%||73.1%||21.4|
House hunting is rarely an easy experience but the inventory in the Coastal Virginia communities aligns better with the type of homes prospective homebuyers are seeking. Premium home searchers will have many choices this season. Whether they are looking for a luxury Virginia Beach condo or a five-bedroom house in Norfolk, like the national inventory, there is a excess of premium homes. Premium homes represent 44.3 percent of the Virginia Beach metro inventory but only 37.1 percent of all searches are for premium homes.
First time homebuyers Coastal Virginia should expect a longer home search since inventory falls short of searches in this metro. Patience is key when getting started in the Hampton real estate market or finding an affordable home in Newport News. The gap between searches and inventory in the Virginia Beach metro is -2.5. Virginia Beach starter home inventory comprises 30.3 percent of the metro’s inventory but starter home searches are 32.8 percent of the metro’s searches.
The most challenged segment will be residents looking to move out of their first home. Coastal Virginia has a shortage of trade-up homes. For families whose Chesapeake home is too snug, finding a home that is roomier home in Portsmouth may not be a simple task. The gap of trade-up homes in Coastal Virginia -4.7, just .6 percentage points lower than the national gap. Searches for trade-up homes constitute 30.1 percent of all searches while trade-up homes are only 25.5 percent of inventory.
The indication is that the inventories will continue to be discordant to searches both nationally and in Coastal Virginia. While it is slightly easier in the Virginia Beach metro, first time homebuyers and residents looking to trade up should be prepared to compete with multiple offers and expect an extended home search.