Lack of Inventory Hampering Home Buying Season
Pro Teck Valuation Services, Waltham, Mass., said lack of supply remains a top concern with the spring buying season underway, to the point where it could dampen home sales to a lower level than last year.
“The lack of inventory is in fact very real,” Pro Tech said in its monthly Home Value Forecast. “The lack of housing inventory comes as a result of a combination of factors; most notably the reduction of new housing starts post-crisis, investors buying and now renting homes, and the lack of equity and/or rising interest rates keeping people in their homes longer than anticipated.”
Pro Tech reported the Months Remaining Inventory, defined as the current number of active listings divided by the monthly sales rate, saw a 14.4 percent drop from a year aao and a full 25 percent drop from two years ago.
“Traditionally, a balanced market would have an MRI between six and 10 months,” said Pro Teck CEO Tom O’Grady. “This month, only eight metros we track have MRIs over 10, compared to 27 last year and 48 two years ago–illustrating that this lack of inventory is not being driven by traditionally ‘hot’ markets, but is rather a national phenomenon.”
Pro Teck reported the five metros with the lowest Months of Remaining Inventory are all from California and Washington, led by Seattle with the lowest MRI, 1.75 months.
“Looking at MRI by home price in the Seattle market shows just how hard it is to find a traditional ‘starter’ home at the lower end of the price range,” O’Grady said. “Seattle has a dire need for more single-family, moderately-priced homes, as supply has not kept up with demand, leading to limited inventory and increasing prices. While more multi-family homes are being built, single-family home starts are still at a fraction of pre-crash levels. The limited inventory, coupled with high employment and household income gains, have all combined to create record housing price increases as shown in the chart below.”
The report said markets with the highest composite scores were Mount Vernon/Anacortes, Wash.; Bremerton, Wash.; Portland, Maine; Omaha, Neb.; Nashville, Tenn.; Bellingham, Wash.; Sacramento, Calif.; Colorado Springs, Colo.; Stockton-Lodi, Calif.; and Seattle.
“Once again this month, the Top Ten is all about supply, with all 10 seeing a decrease in active homes on the market, leading to quick sales and fierce competition,” Pro Teck said. “This competition should continue through the peak home selling months.”
Market with the lowest composite scores were Las Cruces, N.Mex.; Mobile, Ala.; Huntsville, Ala.; Virginia Beach/Norfolk/Newport News, Va.; Miami; Chicago; Shreveport, La.; Kileen, Texas; McAllen, Texas; and Scranton/Wilkes-Barre, Pa.
The report said Scranton/Wilkes-Barre saw higher foreclosures and longer days on market stall any significant price gains. “The area lost a considerable number of jobs post housing crisis,” Pro Teck said.
The report can be found at https://www.proteckservices.com/home-value-forecast-lack-of-inventory-seattle/.
