Historic Housing Inventory Shortage
Housing inventory shortages on a nationwide basis are at their worst in 20 years. The first six months of 2018 showed inventory levels listed is at 18.2 percent lower than the same period of 2015. The number for homes on the market in 2018 (6.2 million) drastically different from the 14.3 million total in January 2009.
Why is inventory staying so low—and getting lower? Research points to builder caution coming out of the crisis, high competition between buyers, limited lot supply, and rising costs.
“Buyers have the least amount of options they’ve ever seen before;” says Javier Vivas, director of Economic Research at realtor.com, adding that “competition has virtually doubled over the past five years.”
It is a statewide and nationwide problem however, it was especially pronounced in Seattle. In the spring of 2018 the Seattle metro area – tied only with Denver for lowest housing inventory – had one of the fastest markets in the country. This meant high levels of competition and prices for would-be buyers. An inventory crunch, as many argue, is not the only thing driving up home prices. It is not as though we are adding new homes for sale at the same rate as we are bringing rental homes on the market—or new people to the region. However, limited inventory certainly is not helping.
Some of the larger markets are, experiencing an inventory rebound, with less sellers holding underwater mortgages. Many of these homeowners are hoping to sell while prices continue to rise. Unfortunately, this localized market shift has not been widespread enough to reverse the shortages on a national level.
With real estate prices at a record high, Seattle homes are routinely seeing year-over-year increases in the double-digits. Sixty-five percent of Seattle homeowners who would be open to selling are choosing to hold off because they do not want to buy their next home in this market. Many of those same homeowners would not blame potential buyers for not wanting to buy in the current market. Sixty-seven percent of surveyed homeowners said that people who buy in their neighborhood right now are “overpaying.”
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