Greater Boston is running out of starter homes.
Many communities in Eastern Massachusetts often have just a handful of homes for sale for less than $500,000, and inventory has been shrinking rapidly in recent months. While the region has long struggled with a shortage of properties across the range of prices, supply is drying up fastest at the lower end of the market, according to an analysis of Boston-area data by real estate website Zillow.
Svenja Gudell, chief economist at Zillow, said the lack of enough starter homes threatens to upend the traditional path to home ownership treasured by generations of Americans.
“This is really starting to, for lack of a better word, mess with the entire market,” Gudell said. “You don’t have that normal flow of people being able to enter the bottom of the market and sell and move into the middle — it really disrupts this flow that we used to see.”
The scarcity shows a real estate market in hyperspeed: Homes are selling in a matter of days, hours even. Typically, inventory builds over the course of the season as new homes come on the market; now, with properties being snapped up as soon as they’re listed, buyers often just have a few choices, and those, too, disappear quickly.
“The train has left the station, and anyone who waits is missing it,” said Mary Gillach, whose Brookline-based real estate firm markets homes in the Boston area. “It’s not a matter of waiting. It’s not coming. It doesn’t exist.”
While the Boston area experienced a surge in new housing construction in recent years, most has been at the high end of the market, and much of that has been rentals. It’s all done little to relieve the pressure on people who can’t afford million-dollar mortgages.
Listing data assembled by Redfin, a national real estate brokerage, provide a snapshot of what was still on the market at the end of May. In Reading, for example, there were five single-family homes for sale under $500,000; four years ago there were 53. Neighboring North Reading also had five, down from 36 in 2012.
Malden, which has become popular with buyers priced out of neighboring communities, had 10 condominiums under $500,000 for sale at the end of May and seven single-family homes.
Next door in Melrose, there were also seven single-family homes listed at the end of the month.
Redfin compiled data on the communities located along and inside the Interstate 495 beltway, using a cutoff of $500,000, to include communities in and around Boston where starting prices are generally high.
It doesn’t help that homeowners are reluctant to put their properties up for sale because trading up has become so expensive, creating a bottleneck in the current market.
“[Listings] keep dropping, and at some point you’re like, ‘Well, they can’t possibly drop more,’ ” said Zillow’s Gudell, who predicts: “We haven’t hit bottom yet.”
Already, buyers stretch budgets, waive inspections, and skimp on space. They bid. They lose. They start over.
Jennifer Gibbons, who works in Waltham as geriatric social worker, is looking for a home for under $500,000 and has scouted out more than 50 open houses since February.
She’s penned personalized letters to accompany bids: to an avid gardener, she promised to take good care of his flowers; to two parents, she mused of raising her own kids in the home where they brought up their own.
Anything near work — Belmont, Watertown, Dedham — is out of reach, so she’s expanded her search south, reluctantly conceding potential long-haul commutes, from Norwood or Norfolk.
“I am definitely priced out of the metro Boston area,” Gibbons said. She added, “I’ve just been stuck, stuck, stuck.”
Some in the industry have been preaching persistence to tired home-shoppers.
“Because we’re seeing a lot of competitive offers, obviously every buyer isn’t winning the bid [the first time],” said Andrew Sarno, president of the Greater Boston Association of Realtors. “The second, or maybe third time, they win the bid.”
But for some, that’s the exception, not the rule.
Lauren Van Dam, who works for the software firm LogMeIn, has rented apartments near work for the past six years.
In 2013, her employer picked up its suburban shop and moved to Southie, trying to lure younger tech professionals to the city’s lights.
If only they could afford it.
Last June, she and her fiancee tried to buy a condo near the office. The couple offered $25,000 over the asking price for one in Dorchester, only to lose out to an identical bid that waived the inspection. They threw in the towel as buyers after that.
“It’s just not really worth it,” Van Dam said. “I’m not going to spend more than $500,000 for less than 1,000 square feet in the city.”
Priced-out buyers who have given up on owning a home could explain sky-high rental prices, as people have resigned themselves to renting, said Barry Bluestone, professor of public policy at Northeastern University, who has studied Boston real estate for years.
“They’re caught between this rock and hard place. On one hand, there’s very little available at prices they can afford. The rents keep going up, squeezing them,” Bluestone said.
“Meanwhile, they’re having to move farther and farther away, adding to the commute and congestion on our highways.”
Bluestone and others worry about long-term consequences if the current shortage continues.
Michael Hogan, the former chairman of the Massachusetts Business Roundtable, has been raising the housing issue publicly, warning it could hurt the state’s economy.
Hogan, now the chief executive of cranberry giant A.D. Makepeace Co. and previous president of the state economic agency, MassDevelopment, said the housing shortage might keep young professionals from settling in the Boston area.
“All of a sudden they’re married, and they’re thinking about starting a family, and they start looking, and the community that they’ve lived in for the past eight years they can’t afford, and they get farther and farther out, and all of a sudden they’re commuting three hours a day,” Hogan said. “And that’s the place where we lose people.”Michael Bodley can be reached at email@example.com. Follow him on Twitter @michael_bodley.