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Business

Starter homes prove elusive for first-timers

Opening sequence

Opening sequence

Business

Starter homes prove elusive for first-timers

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COMING UP:Starter homes prove elusive for first-timers

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Transcript

00:00:01
>> Rock bottom interest rates and a better job market are creating a wave of people out looking to buy their first house. But finding that dream starter home is the challenge as there are fewer on the market now than ever before. Reuters correspondent Nichola Groom spoke to wanna be first time buyers at a new home development about an hour outside of Los Angeles.
00:00:21
>> They said they've been having a very hard time finding a home to buy, because prices have gone up a lot everywhere recently. And there are multiple bidders on every single property they're looking at, including cash buyers. So it's very hard to compete with that in the market.
00:00:42
>> It's not just a challenge around California's expensive cities, but one that's playing out across the nation. As over the last four years, the number of starter homes available for sale dropped by about 40%. That's in part because Wall Street cash bought up many starter homes on the cheap after the financial crisis and turned them into rentals.
00:01:02
They're enjoying rents that have grown at twice the pace of wages since 2000.>> Another reason is home builders are finding that it just doesn't make a lot of financial sense for them to build starter homes anymore. Their cost have gone up tremendously. They've got higher land cost, higher labor cost and so they have tended to go up market.
00:01:24
>> Building larger premium homes with better odds of cashing in big, but leading first timers out of luck.