Monday Market Update: Inventory is 390k Homes Less Than Last Year

Inventory Shortages

It’s time for an update on the market trend that has defined housing over the last 5 years: inventory shortages. According to Realtor.com, the period of March thru September of 2020 saw nearly 400,000 less homes on the market than the same time period in 2019. In the week ending on 9/19, there were 39% fewer homes on the market than the same week the year prior.

Supply issues have created a classic supply and demand pricing pattern with listing prices up 11.1% nationally year-over-year. Here are a few reasons why inventory gains have failed to materialize this year:

#1: Seller uncertainty amidst the pandemic has halted many prospective listings. Buyers on the other hand have remained ‘largely unfazed by the challenges, and are motivated by low mortgage rates and the fear of missing out on the right home.’

#2: “The majority of sellers are also buyers, so even as new listings hit the market, another buyer is also added,” according to Javier Vivas, Director of Economic Research for Realtor.com.

#3: New construction has failed to fill the gap in the pent-up housing demand, and just as builders shifted their focus to starter homes for millennials aging into FTHB status, sky high material costs and growing labor shortages hampered progress and profit margins.

Did You Know: The supply of existing homes has reached an all-time low, based on data dating back to 1963?! Bloomberg reports that nationwide, “It would take a little more than three months to run out of new homes for sale” [at August’s sales pace]. That figure is even lower throughout much, if not most, of the Bay Area.

If you are thinking of selling, now is a great time IF you have a place to go or an agent who will unequivocally advocate for your timeline and goals. Please let me know if I can help!

Resources Used:

U.S. Buyers Face Significant Inventory Shortages

U.S. Housing Boom Threatened by Short Supply of Homes to Buy