CALABASAS, CA—We've heard for years now, it seems, of the plight of first-time homebuyers turned away from the dream of a first home due to the post-recessionary escalation of prices. That's likely to change, says Marcus & Millichap in its newly released Research Brief on the housing sector.

The focus of many homebuilders is shifting away from what has been their prime product—upscale homes—to smaller houses geared to that until-now overlooked segment. “New-home builders focused on larger, luxury homes since the recession as buyers of these homes faced fewer credit restraints and remained active in the market while first-time homebuyer activity weakened,” the Brief explains. “As a result, a shortage of smaller, entry-level homes typically targeted by first-time homebuyers weighed on the market. Builder sentiment, however, has begun to shift as they seek to capitalize on rising demand for single-family housing.”

The report points out, while the size of newly completed homes is shrinking, sales volume in the lower price segment has grown. Marcus reports that the median size of a new single-family home shrunk by 70 square feet in Q2, “while sales of new homes in the $200,000 range strengthened.”

Of course, an increased ability to buy a new home has possible ramifications for the rental market. Not to worry, say the researchers of Marcus, at least not for the short term. “Through the remainder of the year and into 2017,” they say, “newly formed households will continue to favor rentals, sustaining steady demand for the record number of apartments scheduled for delivery in 2016.”

But it's more than pent-up demand that is driving the shift. Constrained inventory has restricted existing sales, and homebuilders finally see opportunity for increasing entry level supply, says the Brief. “Despite healthy job creation and low interest rates,” it states, “sales of existing single-family homes have failed to advance as inventory constraints and high prices keep many would-be buyers from purchasing homes.

“In recent months,” the report continues, “sales activity has flattened but remains above the long-term average, and the supply of existing single-family homes for sale fell to 4.2 months in August, the lowest level since mid-2005. Rising prices have been driven by this shortage of listings and healthy demand, with the median advancing more than 4% above the pre-recession peak to $240,200 during the month.”

The Research Brief has more to say on such issues as mortgage applications and shifts in lifestyles. Please click here.

CALABASAS, CA—We've heard for years now, it seems, of the plight of first-time homebuyers turned away from the dream of a first home due to the post-recessionary escalation of prices. That's likely to change, says Marcus & Millichap in its newly released Research Brief on the housing sector.

The focus of many homebuilders is shifting away from what has been their prime product—upscale homes—to smaller houses geared to that until-now overlooked segment. “New-home builders focused on larger, luxury homes since the recession as buyers of these homes faced fewer credit restraints and remained active in the market while first-time homebuyer activity weakened,” the Brief explains. “As a result, a shortage of smaller, entry-level homes typically targeted by first-time homebuyers weighed on the market. Builder sentiment, however, has begun to shift as they seek to capitalize on rising demand for single-family housing.”

The report points out, while the size of newly completed homes is shrinking, sales volume in the lower price segment has grown. Marcus reports that the median size of a new single-family home shrunk by 70 square feet in Q2, “while sales of new homes in the $200,000 range strengthened.”

Of course, an increased ability to buy a new home has possible ramifications for the rental market. Not to worry, say the researchers of Marcus, at least not for the short term. “Through the remainder of the year and into 2017,” they say, “newly formed households will continue to favor rentals, sustaining steady demand for the record number of apartments scheduled for delivery in 2016.”

But it's more than pent-up demand that is driving the shift. Constrained inventory has restricted existing sales, and homebuilders finally see opportunity for increasing entry level supply, says the Brief. “Despite healthy job creation and low interest rates,” it states, “sales of existing single-family homes have failed to advance as inventory constraints and high prices keep many would-be buyers from purchasing homes.

“In recent months,” the report continues, “sales activity has flattened but remains above the long-term average, and the supply of existing single-family homes for sale fell to 4.2 months in August, the lowest level since mid-2005. Rising prices have been driven by this shortage of listings and healthy demand, with the median advancing more than 4% above the pre-recession peak to $240,200 during the month.”

The Research Brief has more to say on such issues as mortgage applications and shifts in lifestyles. Please click here.