It doesn’t matter how “good” something is, there is always a catch.

Sure, the Internet has made home searches faster/easier and sure, the Internet has made loan searches faster/easier and sure, the Internet has made home buying and selling faster/easier BUT the Internet has also increased home prices.

Here’s how this has happened. Accelerating all aspects of the home buying and selling process has driven down the number of,( the amount of inventory),  homes for sale.

Let’s assume that one new listing comes on the market every day and that it takes that new listing 100 days to reach a final sale. One new listing and one sale every 100 days equal a stable inventory of homes for sale, right?

Now, let’s assume that an innovation comes along that speeds up the sale process and that the innovation is the Internet. The Internet makes it possible to now get to a final sale every 99 days instead of 100 days. Now the inventory of homes for sale has shrunk because the number of houses sold is now progressing at a faster pace than the number of homes coming on to the market, right?

Then, when the internet process improves even more so that it takes less time, say 98 days instead of 99 or 100 days, to get to a final sale, there is even less inventory, right? Got it?

Now, let’s take a look at Zillow’s data as a way to substantiate this process of shrinking inventories and faster sales. Zillow reports that in July 2011, there were 2.4M homes for sale in the US. In July 2017, there were 1.4M homes for sale in the US. AND, there were more people in the US in July 2017 than there were in July 2011.

Simultaneously, Zillow reports that in July 2017, the rate at which homes were listed AND sold has risen. In July 2011, Zillow indicates that there were 300,000 homes sold each month. In July 2017, there were 500,000 homes sold each month.

Redfin substantiates the “faster/easier” home selling process initiated by Internet innovations by reporting that 2012 “days on the market” were 80 while 2017 “days on the market” were 50.

The results of this faster/easier home buying/selling process?

Declining inventory

Declining affordability

Higher prices on all market price points

Seller’s market nationwide

Fierce competition and bidding wars

Potential repeat buyers fearing risks of buying in sellers market despite wanting to buy

Solutions to balancing a housing market that is likely to become even more exacerbated with shrinking inventories by ever more Internet innovations?

Building more new homes which will also spark vacancy

chains so that every new home buyer sells their old

home to its next new buyer

Replacing home buying DISincentives such as the

$500,000 cap on capital gains taxes that keep older

owners in their pricey markets to “age in place” instead

of subjecting their children to future inheritance taxes

AND replacing the new caps on Mortgage interest

Deductions.