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Listing Inventory Takes Critical Hit
Listing inventory is taking a critical hit, with 9 percent fewer for-sale homes on the market now than one year ago, a slump not seen in four years, according to the May Zillow® Real Estate Market Reports. The Columbus, Ohio, San Jose, Calif., and Minneapolis, Minn., markets have seen the steepest declines, at around 30 percent.
Supply continues to drag behind demand due to a convergence of several conditions, says Zillow Chief Economist Dr. Svenja Gudell.
“Inventory has been falling for years with supply no longer meeting demand, and there are multiple reasons for the worsening situation,” Gudell says. “On the demand side, simple demographic change is contributing to incredibly high demand as millennials reach their prime home-buying years and begin to enter the market in droves. This is coupled with relatively low levels of new-home construction on the supply side insufficient to keep pace with demand, and what is built is largely priced beyond the reach of many of the first-time and entry-level homebuyers in the market.
“Thousands of single-family homes that were once bought and sold every few years prior to the recession have now been converted into rental properties by investors, trading hands much less frequently and further contributing to inventory shortages,” says Gudell. “And finally, in some still hard-hit markets, negative equity is likely keeping many homeowners of lower-end homes from listing their home for sale because they can’t afford to profitably do so.”
Home values nationally have appreciated 7.4 percent from one year ago, with the median at $199,200, according to the Reports. Values are up 13 percent in Seattle, Wash., from one year ago and roughly 11 percent in Dallas, Texas, and Tampa, Fla.
With homes on-market a mere 77 days in May, buyers can expect to continue experiencing a scramble to snap up supply, Gudell says.
“There is no silver bullet that will clear the market of all of these issues, and buyers frustrated by the status quo will likely have to remain patient and be ready to pounce once that perfect home does become available,” says Gudell.
For more information, please visit www.zillow.com.
By Richard Eimers
For a local perspective to the article "Listing Inventory Takes Critical Hit" I thought I would give you a snapshot of our local inventory, (please see spreadsheet below), directly from our local MLS a comparison of the last 12 months of inventory and sales compared to the 12 months prior. Simple comparison shows inventory in our market is also down and prices continue to increase.
We, being local full time local Realtors have been discussing the shift that has taken place over the last 12 months from a "Balanced Market" to a "Seller's Market". So many sellers have been reluctant to put their properties on the market for fear of saturation of inventory and the return to a "Buyers or Balanced Market" which could adversely affect the continued appreciation.
As a large part of my business I list and sell properties that did not sell during their listing period with their last Realtor, commonly referred to as "Expired Listing" and I have found 2 things to be true. 1st the Expired Listings were a little over zealous in their pricing and 2nd what may have been over priced 12 months ago maybe fair market value today. As always fair market value is based solely on recently sold comparable properties and nothing else, by correctly pricing the listings I take,pricing with-in 5% of fair market value the are under contract with in 14 to 30 days.
Buyers are waiting to buy, Buyers are also a great judge of value as they are actively comparing comparable properties, if they are not writing offers on actively for sale properties there is a very good chance those properties are over priced more than 5%.
Sellers who price their properties based on what their friends or neighbors say or on their feelings or the need to pay off some debt are missing the boat.
The price ceiling of our highest prices of 2005 has been raised, there are some parts of our market, as an example - the east end of 30A, have already exceeded that ceiling. Many of the shoulder markets still have approximately 20% to 30% growth before they reach that ceiling and these increases can only be accomplished incrementally, so there is still plenty of value opportunities out there.
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