Inventory Shortages Are Slowing Down the Market
The real estate market is moving more
and more into a complete recovery. Home values are up. Home sales are up.
Distressed sales (foreclosures and short sales) have fallen
dramatically. It seems that 2017 will be the year that the housing market
races forward again. However, there is one thing that may cause the industry
to tap the brakes: a lack of housing inventory. While buyer demand looks like
it will remain strong throughout the summer, supply is not keeping up. Here
are the thoughts of a few industry experts on the subject:
Lawrence Yun, Chief Economist at NAR:
"Sellers
are in the driver's seat this spring as the intense competition for the few
homes for sale is forcing many buyers to be aggressive in their offers.
Buyers are showing resiliency given the challenging conditions. However, at
some point — and the sooner the better — price growth must ease to a
healthier rate. Otherwise sales could slow if affordability conditions
worsen."
Tom O’Grady, Pro Teck CEO
“The
lack of inventory is very real and could have a severe impact on home sales
in the months to come. Traditionally, a balanced market would have an MRI
(Months Remaining Inventory) between six and 10 months. This month, only
eight metros we track have MRIs over 10, compared to 27 last year and 48 two
years ago—illustrating that this lack of inventory is not being driven by
traditionally ‘hot’ markets, but is rather a broad-based, national
phenomenon.”
Ralph McLaughlin, Chief Economist at Trulia
“Nationally,
housing inventory dropped to its lowest level on record in 2017 Q1. The
number of homes on the market dropped for the eighth consecutive quarter,
falling 5.1% over the past year.”
Freddie Mac
“Tight
housing inventory has been an important feature of the housing market at
least since 2016. For-sale housing inventory, especially of starter homes, is
currently at its lowest level in over ten years. If inventory continues to
remain tight, home sales will likely decline from their 2016 levels. …all
eyes are on housing inventory and whether or not it will meet the high
demand.”
Bottom Line
If
you are thinking of selling, now may be the time. Demand for your house will
be strongest at a time when there is very little competition. That could lead
to a quick sale for a really good price.
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