The latest edition of REALTOR magazine just arrived, and I found an article by the chief economist of the National Association of Realtors, Lawrence Yun, quite interesting. The article says that “the inventory of existing homes is at its lowest level in 7 years, while newly constructed home inventory has also hit a 50-year low mark. Falling inventory is causing home prices to shoot up higher and faster than anyone anticipated. The national median of a transacted homes was up 9.5% in August.”
The article goes on to say that the Case-Shiller and FHFA price index are rising as well, at double-digit annualized rates in recent months. As winter approaches here in St. Petersburg, we are seeing inventory levels dropping to numbers previously unseen – as low as 3 months worth. A balanced real estate market is when there is 6 months of inventory – then you have an equal number of homes for buyers as there are listings. But not here in St. Pete (or in Tampa for that matter), we are into a Seller’s Market again.
Fewer homes are listed after Thanksgiving traditionally and inventory tends to be 15% lower in winter than summer. Do you know what this means? Supply and demand! If you have been on the fence about selling your home – now is the time, demand is still high, but supply is very low! I still have plenty of buyers looking for homes, and there is nothing out there for them. This time of year, when inventory is low but buyers are still aplenty, you could even have a bidding war on your hands over a home in nice condition. I see this happen all the time.
To prove my point, as a buyer myself who’d been searching for months for a new St. Petersburg home – I just went under contract finally in October, and we close 2 days before Thanksgiving. Prior to putting in an offer on this home, I had put two previous full priced offers on other homes and was outbid by other buyers. Crazy! Imagine how ticked off I was as a Realtor to not be able to secure myself a home – incredibly frustrating! But alas – as they say – everything happens for a reason. Finally I found a home that I fell in love with more than the previous two, and I successfully beat out another buyer with a competitive offer, and a nice letter to the Sellers. See, people do move around the holiday season! And I’ve finally found my dream house.
If last year’s seasonal decline is any indication (it was even more dramatic at 25% lower inventory), we could see historically low inventory levels this winter. Yun feels that a slight seasonal relief will come for buyers in March, as the Spring buying season gets underway, but a deeper and longer-term issue is the possibility of a housing shortage across many parts of the country.
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