In March 2017, the National Association of Realtors reported a record low for the supply of available — homes across the nation. Supply was at the lowest level noted in the 18 years such numbers have been tracked, and inventory just a month later remains critical. The drought is spurred in part by slow development and investor hoarding of distressed properties.
Investors scooped up around four million properties across the nation when the housing bubble burst. Many were able to buy foreclosed or otherwise distressed homes at low price points; the idea seemed to be that investors would wait for a recovery period, when home values rose, and flip the properties for a profit. However, those homes are not yet making their way back onto the market in enough mass to alleviate shortages. Many investors are renting properties to individuals who can't find suitable entry-level homes to purchase; others are riding out the price wave and waiting for an even higher return.
The skewed growth in new home inventory is also driving shortages. While building has slowly increased from previous lows, developers are concentrating on the high-end market, which leaves little for a growing number of buyers in more affordable sectors. The result is a domino effect; homeowners in entry-level properties can't find suitable mid-level accommodations to purchase. With equity building in their current property, many homeowners are remodeling and expanding rather than moving, leaving even fewer entry-level homes available. Price Watch and Trulia Inventory note that the number of available entry-level homes on the market dropped 8.7 percent year-over-year.
While recent months have brought good news for the housing market, this inventory shortage doesn't seem to be something that will right itself soon. Continued economic instability in other markets is also likely to create ongoing waves over housing, contributing to uncertainty for both buyers and sellers.
Demand has driven up prices in some markets, which can be good for sellers. Brokers representing homeowners might be able to drive harder bargains during the normally active summer real estate season. On the other side, buyer's brokers may need to work harder to find suitable homes for clients. Connecting potential buyers with professional mortgage and financial resources might help them discover ways to up buying budgets and get into existing inventory when possible.
Release ID: 203123