Yes it is true that many investors have retreated from the market, prices are up and move-up buyers looking for more space and retirees downsizing,  rents are also raising and the amount of rental inventory is also low.

Yes, first time buyers will pay more and have their challenges but they should not stay on the sidelines and watch. Down Payment requirements are lower and there has been a reduction to the PMI insurance premiums so first time homebuyers or renters should explore and decide what they can afford.

While it may be painful to see low inventories and higher prices, I do not think it will get easier for first time buyers especially if mortgage rates rise which they will but I do not know when. My guess is middle to latter this year.