In its just released housing trends study, realtor.com found that lower-tier housing markets around the country priced at or below $200,000 experienced inventory losses of -10% y/y during September 2019.
Inventory levels of mid-market homes priced between $200,000 – $750,000 were at a standstill after growing for 18 consecutive months.
George Raitu, realtor.com’s senior economist, believes these two inventory trends could be consequential for potential homebuyers into 2020. Raitu said, “Buyers looking for their next home have faced the headwinds of tight inventory and a competitive market this year. While lower mortgage rates and the arrival of fall promised a reprieve, conditions continue to tighten as demand remains strong…September inventory trends (suggest) we could be headed for even lower levels of inventory in early 2020.”
Raitu also predicts that if low interest rates continue to give consumers more home purchasing power via “cheaper” money through the end of this year, some potential buyers may consider expanding their horizons to more expensive homes. Such a turn to upper-tier homes priced +$750,000 could mean an eminent inventory decline in this market segment as well by as soon as February 2020.
Raitu commented, “The mid-tier of housing represents nearly 60% of houses for sale on the market, making it a solid indicator of how tight inventory levels are in the US…If…or when inventory in this (mid-tier) segment begins to take a downturn, the vast majority of homebuyers are going to feel it effects as their options rapidly dwindle.” With favorably low interest rates, Raitu intimated, these homebuyers may feel they have no choice but to go up in price.
Does this realtor.com housing trends study imply that homebuyers ought to strike now while there is still available inventory within the mid-market tier and price growth is moderate at +4.3% y/y rather than last year’s price growth of +7.3%? We’ll wait and see, right?
Also read: https://timandjulieharris.com/2019/09/30/low-interest-rates-bolster-august-existing-home-sales-and-refinancings.html, https://timandjulieharris.com/2019/10/07/property-investment-during-a-recession.html , https://timandjulieharris.com/2019/09/27/podcast-exclusive-mega-agent-interview-featuring-al-stasek-2.html