Could Inventory Be Sitting at Trough?

Key Highlight

• Currently, housing supply at 1.1 month
• 43% industry experts predict uptick in second half of 2021; 26% say 1^sthalf of 2022

Housing Supply Sits at Record Low

Currently, the nation’s housing supply sits at a record low of only 1.1 month.

Buyers, sellers, agents and investors alike have all experienced this record low.  Prices have skyrocketed from 12% to 16%, depending on which entity is doing the counting, and bidding wars have become the norm.  Even sellers who can anticipate ROI gains on their properties have been reluctant to sell for fear of not being able to find another home in which to live.

For single-family real estate investors, this low inventory environment has been exacerbated by foreclosure bans and limited distressed properties.

Where Inventory Supply Is Headed

Many industry experts are predicting an inventory turnaround sooner rather than later.  Of 100 economists surveyed, 43% are predicting more for-sale single-family homes in the second half of 2021.  Another 26% are forecasting more supply in the first half of 2022.

The latest inventory data backs up these forecasts.  During the week ending May 1, new listings shot up +18% after seeing steady increases in the three preceding weeks.

One might contradict such optimism due to total listing being down +50% annually but small steps forward are better than no steps forward, right?

Sellers’ Thinking Becoming More Proactive

A recent realtor.com survey indicated that 10% of all homeowners intend to sell within the next 12 months.  This 10% is significantly higher than homeowners typically intend to sell…25% higher.

According to George Ratiu, senior economist with realtor.com, “(This 10%) underscores the fact that wile many sellers have been sitting on the sidelines, wary to list their homes in a year marred by a global health pandemic, an economic recession, large job losses and tremendous uncertainty, with the outlook looking much brighter in 2021, they are ready to act on their delayed plans.”

Majority of these homeowners indicate they will list their properties within the next six months.
Homeowners in the Northeast indicate they will list their properties in seven to 12 months out.

Bottom Line

If the above data, surveys and homeowners’ comments play out, the housing market supply could considerably pick up during the next few months.  Even if inventory supplies increase only slightly, price pressures may ease and become more affordable for investors and individual buyers alike.

Thanks to Millionacres.

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