January 10, 2013

The New Normal - Is the November 2012 Home Inventory Report Any Indication?


The one thing that I think that could be standing in the way of recovery — and this is going to sound funny to some ..... 

The biggest challenge facing most markets is inventory. This chart shows the month’s inventory of homes for sale from the NAR existing home sales report. 

A normal market is that yellow line going across.   That line reflects 5-6 months of inventory. The challenge sellers have faced over the last two years as you can see was that the inventory was well above normal levels.  That being said - we were knee deep into a buyer’s market.

There was too much inventory for sale compared to the amount of demand there was for that inventory. As pricing is all about supply and demand - clearly, supply was very high while demand was not.  This directly affected pricing and values.

Well,  demand has began to sharply increase. Just take a look at my previous post. And at the same time, inventory is decreasing below normal levels in many parts of the country.

As a nation overall what does that mean?

Well if demand is up and supply is down, prices are going to creep up which is exactly what has taken place.   Buyers have noticed and are moving forward before they are priced out of the market or rising interest rates reduce their buying power.  Will this trend become "The New Normal" for 2013?  Will it become "The New Normal" locally as well as nationally?

These are national trends and local trends may vary.   What is the inventory like in our market?

If you would like a local area market report Call me today at (914) 374-8354.