Inventory is still low. It has been for years now. Prices
have risen, interest rates are low, a good time to sell, a good time to buy.
Usually when inventory is low it’s a great time for sellers.
With interest rates as low as they are it’s also a good time for buyers This
could be called a balanced market, but the low inventory tips in favor of the
seller just a little.
Fall is upon us and Winter is not far behind which
signals the usual slow down for real estate. Inventory will decrease and there
will be even less to choose from for buyers. This could cause greater demand such
that by the time February rolls around the market will be sizzling with anxious
buyers awaiting the arrival of new listings.
But then there is the election… and who knows. Borrowing
rates could become volatile which in turn could cause a less desirable lending
environment. Even though prices have the potential to stay strong, assuming the
prices will continue to climb could be a risky bet.
The question left unanswered here is “why has the inventory been
so low for so long?” There can be all kinds of reasons, but I read an
interesting statistic lately from the National Associations of REALTORS Profile of Home Buyers and Sellers. It shows that since 2011, the bottom of the
housing downturn, home owners have been
staying in their homes longer. Where as from 2000 – 2008 the average period of keeping a home
was 6 years, now it has climb to 9 years!
“In 1985, the median tenure for sellers
remaining in their home was five years, the lowest since tracking the data in
the 30-year period. From 1987 to 2008, the median tenure for sellers was a
steady six years throughout the course of about a 20-year period. The only
exception was in 1997 when the median tenure jumped up one year to seven years
for sellers. As the U.S. housing market entered a recession, the median tenure
for sellers began to rise—seven years in 2009, eight in 2010, and to nine years
in 2011 where it has remained steady through 2015. The only exception is in
2014 when the median tenure for sellers reached an all-time high at 10 years,
but came back down to nine last year. Thus market changes in the last decade
have caused sellers to remain in their homes longer, increasing the median
number of years in the home by 50 percent more than they did 20-30 years prior.”
This is the first piece of information I have
come across that explains why the inventory of existing homes for sale has
remained low for the past few years. If this is a leading factor, and unless
builders are able to start producing more new homes for buyers to purchase, I
believe we should expect inventory to remain low for a while.
