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Housing Inventory Lowest Level On Record
NAR: This is the worst ‘housing drought’ ever
WASHINGTON – March 28, 2017 – The number of homes for sale is at the lowest level on record, according to the National Association of Realtors® (NAR), which began tracking inventory 18 years ago.
For buyers, that means they'll find fewer options this spring, and homes that are listed will probably sell fast and at a premium price.
The lack of new-home construction is one reason for the dearth of listings. Builders' housing starts are only at about 75 percent of their historical average as they focus on pricier segments of move-up buyers. As a result, there's a void in the number of new lower-cost homes that appeal to first-time home buyers. Builders blame the lack of production on higher costs for land, labor and materials that, they say, forces them to concentrate on the higher end of the market.
Builders aren't the only ones to blame, however. Investors purchased about 4 million distressed properties – mostly in the lower-priced starter home segment – during the housing crash. They have been holding onto these properties, continuing to rent them out rather than selling.
"Investors came in to get that cash flow, and the cash flow remains very positive," says Lawrence Yun, chief economist at the National Association of Realtors. "The price appreciation is just extra gravy that they're witnessing, and they're saying they're going to ride out this price increase."
That strong price appreciation also may be curtailing home supplies. The more a local market has recovered, the larger the drop in inventory it's experiencing, according to a new survey by Trulia.
"If you have a lot of equity in your home, that could be great to use to buy another one, but if that other home you might buy is that much more expensive than it was last year, you may stay put and you may renovate instead," says Ralph McLaughlin, Trulia's chief economist.
As such, the housing crunch likely isn't going to let up anytime soon. Some areas are seeing it worse than others. For example, home sales in Southern California in February were 14 percent lower than the average, according to CoreLogic in reviewing 30 years of data.
"San Bernardino County, which has the region's lowest median sale price and entices many first-time buyers and others priced out of coastal markets, was the only Southern California county to post year-over-year increase in sales this February," notes Andrew LePage, research analyst at CoreLogic.
Source: "This Is What's Behind the Severe Housing Drought," CNBC (March 23, 2017)
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