Housing shortage eases in some markets
Rising inventories in third quarter could boost sales
Some relief may be in sight for a housing crunch that’s been driving up home prices and crimping sales across the country.
Housing inventories rose in the third quarter from a year ago in 21 of the 100 largest markets, according to real estate research firm Trulia. Although small changes in the figures can represent normal volatility, six metro areas recorded annual increases of more than 20% — Fort-Myers, Fla.; Miami; Las Vegas; Fresno, Calif.; Sarasota, Fla; and Oklahoma City — up from two in the second quarter.
Some of the markets are in the socalled “sand states” of Florida, California and Nevada, which experienced some of the biggest price declines in the real estate crash but also have led the recovery in recent years. As a result, their housing stocks dwindled, but are now being replenished.
“My belief is this is the start of a turnaround in inventory,” says Trulia chief economist Ralph McLaughlin. He noted, however, that it could take six months to a year before a shift is evident in a significant part of the country.
Nationally, housing inventories fell 10.1% to a 4.6- month supply in August
from a 5.1- month supply a year ago, the National Association of Realtors said last week. That was the lowest August stockpile since 2004, says NAR chief economist Lawrence Yun.
Yun blamed the shortage for his group’s announcement that existinghome sales fell in August for the second straight month to the second- lowest level of the year.
Besides leaving fewer homes on the market for buyers, the crunch discourages sales by pushing up prices. The median existing home price was $ 240,200 in August, up 5.1% the past 12 months, the Realtors group said.
Unlike NAR, Trulia includes newlybuilt homes in its inventory totals. They represent just 10% of supplies but increased construction likely is helping to beef up skimpy selections in certain markets, McLaughlin says.
Yet McLaughlin mostly attributed the rising inventories in some areas to an increase in existing homes. Investors who scooped up units on the cheap after the real estate crash are putting them up for sale in greater numbers, he says.
Also, price gains are providing positive equity to homeowners who had owed more than their homes were worth after the crash. That’s coaxing many to sell. In the second quarter, 11.9% of homeowners nationwide were “seriously underwater,” down from 13.3% a year ago and 29% in 2012, according to RealtyTrac.
Housing inventories in the San Francisco area are up 19.3% compared with a year ago, Trulia figures show. Largely as a result, the region’s home prices in June were up 6.4% annually, down from 11.1% in November.
The area has seen a lot of new condo construction as well as an increase in existing home supplies, says real estate agent Gabrielle Bunker of Coldwell Banker. She’s seeing fewer multiple offers for homes and far fewer buyers bidding more than market price. While the market is still competitive, she says, “People do have an easier time buying homes.”