Real Estate Inventory at Lowest Levels Since ‘99

The new year has brought a rise is home sales throughout the real estate market, except certain areas where there is a lack of inventory. In fact, sales were up around 9% in comparison to this time in 2012. This is a great sign for sellers, since they are now able to get more back from their home sale then in recent years.

While this is good news, there is also a sign of a potential speed bump in the near future. Already in some areas, including large portions of the west coast, the amount of homes available for sale is dwindling down. This is a big reason why housing prices have been on the rise over the past few quarters. This can caused bidding wars among some, which is good for sellers, but if this issue is not addressed there could be a problem.

Experts are expecting home inventory to rise in spring, which is prime time for the real estate market. The thing is, since it is a busy time for real estate professionals, there will be even more demand than usual for homes. Unless there is an overwhelming burst in housing development, chances are unlikely that the demands of the market will be met.

In fact, the amount of available inventory has not been this low since 1999. With an emerging generation poised to meet the marketplace soon, it is important that there are units available for purchase.

If not, housing prices could potentially fall again. Eventually more homes will be built, but if they are not built alongside the amount of demand, there will come a time when they will be built in bulk, and cause prices to fall drastically. Keeping home values at a healthy level is very important for recovery.

This brings up another point. When the real estate market crashed, many builders and construction crew were put out of work. In order to meet this demand, these jobs need to come back. This is potentially why homebuilding has been stagnant even though demand for homes has been on the rise. Obviously the overall economy has ties with each other, and this is one of those examples.

That being said, there are still tough decisions to be made regarding the housing market. New homes need to be built in a way to maintain growth, and not cause any speeds bumps while the nation is on its road to economic recovery.