Record-low Housing Inventory
Bob Schwartz, California real estate broker
Redfin: record-low housing inventory is ‘freaking us out’
Source: CNBC
The number of homes for sale in America has been falling steadily for the past year, but the situation is apparently getting much worse as spring demand heats up.
“The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales,” said Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm. “We’re going to be fine in terms of market share, but I think the overall industry for the first time is seeing sales volume really limited by the inventory crunch.”
Record-low Housing Inventory
Kelman started Redfin more as a technology company and touts his ability to track closely the more than 80 metropolitan markets it covers. He blames the lack of inventory on a new dynamic in housing.
“It’s a new landlord nation where everybody is renting out their basement. When somebody moves up they don’t sell their old place, they rent it out to somebody else, and it’s because they want to keep that 30-year mortgage for 30 years, and it’s because they can easily find somebody on Airbnb who will take the place,” Kelman said.
looking at the national housing stock in the 100 largest metros from the first quarter of 2012 to the first quarter of 2017 shows starter homes witnessed the largest drop in inventory. During that period, the number of starter and trade-up homes fell 8.7% and 7.9%, respectively. But, on the high end home value range, the inventory of premium homes fell only 1.7% from 2012 levels.
A recent Freddie Mac’s report states that the projected 1.26 million starts for 2017 will not be enough to cover the needed 1.7 million new housing units.
So, this tight housing inventory will pull down home sales for the year. Also, Freddie Mac is projecting that home sales will come in at 5.9 million in 2017, falling from 5.97 million in 2016, which was housing’s best year in a decade.
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Very informative blog post! with California’s high permit fees and requirements to build any residential property costing almost 30% of the construction cost it’s no wonder that residential housing prices are as ridiculously high as they are here in the Golden State!