Housing Inventories Drop at Fastest Pace in Four Years
The housing market, already constrained by low new home inventories, has also seen single-family rentals grab a chunk of sellable inventory, putting additional pressure, said Zillow Inc., Seattle.
The company’s monthly Real Estate Market Reports said the number of for-sale homes hitting the market is dropping at its fastest pace in almost four years. The report said the typical home stayed on the market for just 77 days, the fewest days reported. Across the country, home shoppers will have 9 percent fewer homes to choose from than a year ago, the greatest drop in inventory since August 2013, when inventory was down more than 10 percent.
Meanwhile, the number of single-family home rentals has increased by 6.2 million since 2005; Zillow Chief Economist Svenja Gudell said this is one reason why inventory remains low.
“Inventory has been falling for years with supply no longer meeting demand, and there are multiple reasons for the worsening situation,” Gudell said. “On the demand side, simple demographic change is contributing to incredibly high demand as millennials reach their prime home-buying years and begin to enter the market in droves. This is coupled with relatively low levels of new home construction on the supply side insufficient to keep pace with demand, and what is built is largely priced beyond the reach of many of the first-time and entry-level home buyers in the market.”
Gudell said thousands of single-family homes that were once bought and sold every few years prior to the recession have now been converted into rental properties by investors, trading hands much less frequently and further contributing to inventory shortages. “In some still hard-hit markets, negative equity is likely keeping many homeowners of lower-end homes from listing their home for sale because they can’t afford to profitably do so,” she said. “There is no silver bullet that will clear the market of all of these issues, and buyers frustrated by the status quo will likely have to remain patient and be ready to pounce once that perfect home does become available.”
The report said U.S. home values rose by 7.4 percent over the past year to $199,200, with home values in Seattle and Dallas appreciating the fastest. Rents rose by 0.7 percent over the past year to $1,416 per month, with rents in Seattle and Sacramento, Calif. rising the most.
Columbus, Ohio, San Jose, Calif. and Minneapolis reported the greatest annual declines in the number of homes for sale, with about 30 percent fewer homes for sale in each market. San Diego, reported 26 percent fewer homes on the market than a year ago, Seattle reported 22 percent fewer. Both San Diego and Seattle have high buyer demand and home value growth of more than 6 percent.
The report said Seattle, Dallas and Tampa, Fla. reported the highest year-over-year home value appreciation among the 35 largest U.S. metros. In Seattle, home values rose by nearly 13 percent to a median value of $440,100. Home values in Dallas and Tampa increased by nearly 11 percent from a year ago.
Zillow said median rent across the nation rose by 0.7 percent since last May to a median payment of $1,416 per month. Seattle, Sacramento, Calif. and Los Angeles reported the greatest year-over-year rent appreciation among the 35 largest U.S. metros. Rents in Seattle rose by nearly 6 percent to $2,127. Median rent in Sacramento rose by 4.5 percent, while Los Angeles median rent rose by 4 percent.
