In this edition of Housing Insights, Fannie Mae's Economic & Strategic Research Group examines a key contributor to the recent shortage of starter homes: the shift in the nation's single-family housing stock from owner-occupancy to rentals during the housing bust and recovery.
Both demand- and supply-side factors have suppressed purchases by would-be first-time home buyers, which is slowing the housing recovery. But as the labor market has continued to heal and as young-adult incomes have begun to recover, much attention has focused on supply-side constraints. Tight mortgage credit is often cited as an obstacle – but a low inventory of for-sale starter homes appears to be a key impediment to the return of the first-time buyer.
This study analyzes net changes since the onset of the housing downturn in the number of starter homes that are owner- and renter-occupied, and how the tight starter home supply and rapid price gains in the lower tiers of the market are reducing first-time buyer affordability.
Read our latest edition of Housing Insights and hear from the author, Patrick Simmons, in his related FM Commentary.
Click here for an archived list of Fannie Mae's Housing Insights.