By Dr. Housing Bubble
This might sound like the start of a riddle but really, where did all the housing inventory go? In the latest piece of data we find that listed inventory is now at levels last seen in January of 2001. That is right, today we have the same number of homes listed for sale that we did 12 years ago. This continues to be the biggest underreported story in the housing market. A large part of this has to do with the external forces interacting with housing. One has to do with banks holding on selectively to distressed properties while another is the dragging out of the foreclosure process. Next, you still have roughly 10 million Americans that are underwater on their mortgages. Think of that when you realize that only about 1.8 million homes are listed for sale. Those 5 million homes in distress either because of foreclosure or missing payments sure would relieve some of the pressure current buyers are facing.
Inventory keeps moving lower
The reason we have yet to see a massive boom in building similar to what we saw in the 2000s with the first housing bubble is that builders realize these underlying dynamics. In fact, about one third of new building projects are going to multi-family units to meet market demands for a less affluent young generation. Remember those 2 million younger Americans living at home because of the recession? Their first step is likely to be a rental before buying a home.
The fact that roughly 1.8 million homes are listed today, nearly the same as we had in January of 2001 is stunning. We’ve added over 33 million people in that time to the country. The inventory pressures are larger in certain markets like California where some areas have seen inventory decline year-over-year by 50, 60, and even 70 percent: