Fewer Houses For Sale

October 18th, 2011
in econ_news

house-for-sale-open-house Econintersect: The number of houses for sale is declining. It might seem that would create a mismatch with demand and produce some price increases. However, in most markets prices are flat or declining. In fact, data from the NAHB (National Association of Home Builders) reported in a GEI News article on October 6, indicated that less than 6% of approximately 360 metro housing markets can be classified as “improving”.

Follow up:

According to an article in The Wall Street Journal, there were only 2.19 million homes for sale at the end of September. That is 20% less than for the same date one year ago. Apparently home owners are taking their homes off the market rather than settling for what they consider to be too low a price.

Further details from the WSJ:

The shrinking supply isn't driving up prices because demand is soft.

Yet there is still a substantial "shadow" supply of foreclosures and other distressed homes, estimated to be more than one million, that is likely to stream onto the market in the coming years. The pent-up supply is another constraint on any of the price gains that might normally occur when supply falls.

The decline in inventory also suggests that there are fewer opportunities for buyers and sellers to strike deals. That can further chill sales, as buyers become afraid to overpay while sellers are similarly cautious about underpricing their homes.

The number of houses for sale was down in all 146 markets tracked by Realtor.com, according to Realtor Mag. Some specific cities: Detroit -28%, Atlanta -30%, Orlando -46%, Phoenix -47% and Miami -49%. More data is available in a WSJ graph:


See The Wall Street Journal for an interactive version of the above graphic.

Sources: GEI News, The Wall Street Journal and Realtor Mag

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1 comment

  1. JGBellHimself says :

    This is even more extreme than the articles suggest. Take Phoenix, please.

    Arguably the two worst RE markets are Lost Vegas and Phoenix-in-ashes. What is most interesting is that even though we are being told that the "foreclosures" - definition, pick one - are almost gone, and therefore no longer a problem; home prices have fallen this last year, more than most other markets, AND are still falling by more than most markets.

    Why? "They" ask. As do you, NAR and now even the Wall Street J.

    This is also what is called "The Appraisal Problem" - what really IS a valid appraisal price in Phoenix, or at-a-Loss Vegas, now - today?

    Is it The Comps that are too few and not near; and that have dropped 10% or more in value since the last sales? Or, is it the projected price one year from now when the price will have dropped another 10% or more?

    Your seller would like one price, your buyer would like another, your lender would not like any of them.

    Let's put this another way, IF you can put 20% or more down, and the home you like will drop another 20% in value - 10% this year, already, and another 10% in the next 12 months; why, precisely, would you buy, today?

    Does it make a difference if the home is one of Frank Lloyd Wrights unique masterpieces, or a subdivision track home that is surrounded by hundreds of exactly the same floor plans.
    [and, no, that is not really a question]

    And, ask yourself this: Should you sell right now, knowing that you will get even less in a year? Then, even when you discover that you will have to cut your asking price down to what you would get next year?

    Why, precisely?
    Unless you have lost your health, your job, your spouse, and have to do it.
    True, given your spouse, you still might want to do it - with someone else?
    But, as they say: Its gonna cost ya!

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