Nationally, there were 12% more “fixer-uppers” for sale at the end of 2016 compared to five years earlier in 2011, according to Zillow.
To define fixer-upper, Zillow combed listings for phrases like “fixer-upper,” “TLC” and “needs work.”
Among price tiers, fixer-uppers have seen the biggest surge in the high tier — an increase of 35% since 2011. Low-tier homes have seen the smallest increase of just 3% since 2011.
Zillow attributes the increase in fixer-uppers for sale to the overall low inventory available to homebuyers. Conventional sellers in 2011 had to compete with a myriad of foreclosures, short sales and real estate owned (REO) resales. Thus, placing a fixer-upper on the market in 2011 was an easy way to ensure your home was going to sit on the market for months and sell for pennies on the dollar. Making your home as desirable as possible was practically mandatory for sellers during the recession.
Today, inventory is tight and buyers are eager to snatch up anything that comes on the market, even when it means doing extra work on the home.
California sees the most fixer-uppers for sale than any other U.S. region. Nationally, for every 1,000 listings the average metro sees about 10 fixer-upper listings. Closer to home, for every 1,000 listings:
- in Los Angeles, there are 18 fixer-upper listings;
- in San Francisco, there are 15 fixer-upper listings;
- in Riverside, there are 14 fixer-upper listings;
- in San Jose, there are 13 fixer-upper listings; and
- in San Diego, there are 9 fixer-upper listings.
Nationally, at the end of 2016 inventory was 8% smaller than in 2011. In California, inventory has shrunk considerably — on average, across the state’s metro areas, the for sale inventory is 21% smaller since 2011.
Another reason for the high share of fixer-upper homes in California is the lack of new construction here. As the housing stock ages, more fixer-uppers for sale are inevitable. And it’s true, construction has slowed across the nation compared to the Millennium Boom years when construction was at an all-time high. But California continues to struggle to add to its aging housing stock, primarily due to resistance from outdated zoning laws that severely limit density and height.
Think of San Francisco’s charming row houses or “painted ladies.” Iconic, yes. But is maintaining this neighborhood charm good for the housing supply? Definitely not. As evidence, the average home price in San Francisco is over $1.1 million, according to Zillow. The average price per square foot averaged nearly $1,000 in San Francisco in 2016.
California agents and brokers: Do you counsel sellers to fix up their homes for sale before listing? Or do you sense that fixer-uppers sell just as quickly as renovated or new homes? Share your experience in the comments!