In short, buyers are everywhere, but sellers are nowhere to be found. In the continuation of a theme that has been evolving since last summer, listing inventory grew even more scarce in January, while buyers continued pouring into the market, particularly at the entry level.
Under $250,000, which has been the hottest segment of our market for some time, the numbers are even more amazing. A full 63% decline in the number of homes for sale (3,333 this year vs 8,933 one year ago), with 6% more homes going under contract (1,647 this year vs 1,538 last year).
Are you following this?
It is literally a stampede for well-priced, move-in ready inventory.
Below $250,000, we actually have more homes under contract today (3,524) than homes for sale (3,333). Eighteen years in the business, and I’ve never seen buyer demand so outstrip seller supply.
The story is even more complex, I believe, because while there is no metric to measure it, I have tons of anecdotal evidence that suggests the actual strength in the buyer market is more pronounced than these impressive numbers demonstrate. The "hidden strength" in buyer demand lies with the large number of buyers (several working with me) who are waiting for the right house, the right floor plan, the right neighborhood, and/or the right deal. For all the contracts being written, there is an army of patient, discriminating buyers who feel compelled to wait for the "perfect" deal.
Have your pen ready, that's all I can say.
As I have discussed month after month, this has been and will continue to be a segmented market. Below $250,000, things are just sizzling. From $250,000 to $400,000, the market is pretty functional. Above $400,000, it starts tailing off and it gets particularly bad over $600,000. Be careful about generalizations you hear, because the realities at $200,000 are wildly different than what you may see reported regarding $600,000 homes.
Everyone needs a place to live, but due to the economy, the $500,000 buyer of 2007 is a $300,000 buyer today. The $300,000 buyer of a few years is a ago is a $200,000 buyer today. And so on, until you run out of segments to downsize into. At that point, demand so outstrips supply that prices begin to appreciate, working their way up as the market heals. Recovery always starts at the bottom in housing market cycles, and that is 100% on display right now.
For those who keep waiting for the mysterious "shadow inventory" (bank-owned properties that are allegedly being held off the market until things improve), let me ask you this: with inventory down 42% overall and 63% below $250,000, why on earth would you be holding anything off the market right now? If the banks had piles of "secret inventory", we would be seeing it.
Everyone needs a place to live, but due to the economy, the $500,000 buyer of 2007 is a $300,000 buyer today. The $300,000 buyer of a few years is a ago is a $200,000 buyer today. And so on, until you run out of segments to downsize into. At that point, demand so outstrips supply that prices begin to appreciate, working their way up as the market heals. Recovery always starts at the bottom in housing market cycles, and that is 100% on display right now.
For those who keep waiting for the mysterious "shadow inventory" (bank-owned properties that are allegedly being held off the market until things improve), let me ask you this: with inventory down 42% overall and 63% below $250,000, why on earth would you be holding anything off the market right now? If the banks had piles of "secret inventory", we would be seeing it.
With rates in the 4’s and prices offering all-time levels of affordability, buyers are everywhere.
The question remains, when will the sellers return?
