Existing real estate inventory is up 22% from its lowest level in February. Many in the media are claiming that this rise in inventory will lead to some sort of housing crash.
But a deeper look shows that this build in inventory is a normal occurrence that happens every spring and summer.
Families want their children to enter a new class at the beginning of the school year to more easily form friendships. This means they would have to close on the purchase of their new home before September. Naturally, they would have to list their existing home for sale during the spring and summer months to accomplish this, which explains why the inventory build occurs this time each year.
The chart below shows this annual trend – notice how each summer there’s an inventory build-up:
Additionally, the amount of existing homes for sale currently is less than half of what was available pre-Covid. So, the increase we have seen is actually from a historic low. And of those homes counted in inventory, more than half are under contract. This means true available inventory is even less than the headline.
As a matter of fact, you can see from the graph below that actual housing supply is still a near all-time lows and is running at a deficit, relative to new household formations:
The increase in real estate inventory from such low levels isn’t all bad, as it makes purchasing a home a little easier. And while demand has cooled, it is highly unlikely that the housing fears in the media will materialize.
To see what the appreciation forecast is in your local market, contact me here, as I’d be glad to run the numbers for you!