Low Inventory is having a large impact on Home Sales
A faster turnaround for todays sellers these days it purely due to low inventory levels. The average time for a home to be on the market is now 69 days, a figure that is down 30% in comparison to the previous year where it was at 98 days. This current Real Estate markets listings are now reflecting the closing dates to be within 6 weeks of the home becoming available for sale when there is roughly a 6-month supply of properties on the market. In another comparison, inventory levels actually do remain low with a 6.4 month supply of homes currently on the market in July, down 31.2% from a year ago. Last year there was a 9.3 month supply of homes on the market showing just how drastic of a change that has occurred.
It is clear that there is a give and take balance between inventory and time on the market. In fact, the Chief Economist at the National Association of Realtors, Lawrence Yun even went on to comment on the issue stating, "As inventory has tightened, homes have been selling more quickly. A notable shortening of time on market began this spring, and this has created a general balance between home buyers and sellers in much of the country. This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren't often languish on the market. Our current forecast is for the median existing home price to rise 4.5 to 5 percent this year and about 5 percent in 2013, which is somewhat stronger than historic norms because of the inventory shortfall that is most pronounced in the low price ranges. Factoring out short sales, the median time on market for traditional sellers appears to be in the balanced range of six to seven weeks. Ironically, if housing construction doesn't pick up to normal levels within two years, supply shortages could be sustained for an extended period and lead to above average appreciation. Therefore, any unnecessary hindrance to housing starts, such as excessive local zoning regulations or stringent bank capital rules for construction loans, should be carefully re-examined."
Some wonder how this compares to the infamous housing boom in 2004 and 2005 when inventory levels were at an astonishing low. The medium selling time in those days was just 4 weeks which caused such a rise in their price points. At this time the average annual Consumer Price Index (CPI) was at 3.1% which was far less than this rise in prices during the same period which was 10.3%. In 2009 however, the medium time a property was on the market until it sold was at 10 weeks, a record low. Today we can see that the projected CPI growth is at 2.3% for 2013 after being at 2.1% for 2012.
More Information: Realty Times
