Zillow: High prices, tight inventory mean more 'fixer-upper' homes on the market
The percentage of so-called fixer-upper homes on the market today is 12% higher than five years ago, according to a report from real-estate listing website Zillow.
Zillow determined fixer-uppers as homes listed on its site whose descriptions used terms including "fixer-upper," "TLC" and "needs work."
The number of fixer-upper homes priced in the top third of their markets increased nearly 35% from 2011 to 2015, compared to homes in the bottom third, which grew by less than 3%.
Home prices are on the rise due to tight inventory and stiff competition as more first-time buyers enter the market, while existing owners aren’t shedding their current residences for move-up properties in great enough numbers. The average home search takes 4.2 months, Zillow reported last week, and fewer than half of buyers get the first home they offer on.
First-time buyers were the primary driver behind existing home sales’ about-face in September, according to the National Association of Realtors, claiming its largest share of sales in more than four years at 34%. Existing homes, compared to new construction, are much more likely to require renovation and repairs. In the report, Zillow noted that today’s tight buyer market gives homeowners more leeway in putting their properties on the market.
Remodeling activity increased for the 14th-consecutive quarter in the third quarter of 2016, according to the National Association of Home Builders’ Remodeling Market Index. The Index climbed four points during the period to reach a mark of 57. The Joint Center for Housing Studies of Harvard University forecasts an 8% increase in home remodeling activity through the second quarter of 2017, when it is expected to peak.
In a separate report last week, Zillow noted that 18% of homebuyers bought a home that had been renovated recently, while more than half purchased one in need of updates. Only 7% of buyers said the homes required a "complete overhaul." Common updates include repainting, reflooring, landscaping and new appliances, in addition to kitchen, bath and basement refinishing.