What Real Estate Surplus?
February 22, 2011
I heard an interview this morning on Bloomberg TV in which the interviewee cited the cause of the reported decline in housing prices to be "surplus inventory". As in the sale of most commodities, supply and demand do factor into the determination of prices. However, while the number of active listings has risen since January 2010, we are still under the historical numbers for available properties.
Since 2008, when the "Great Recession" hit the construction industry, very few new tract homes have been built. In fact, an inquiry at the the local building department resulted in a finding of no single family housing tracts being processed.
At the present rate of absorption of active inventory, it is even possible that we will find resale homes in short supply. Yes, I am aware that there is a so-called "shadow inventory" of bank owned homes or soon to be bank owned homes, but this "gorilla-in the-room" has failed, as yet, to materialize.
It will be interesting to me when I do the numbers of active listings and listings in escrow to see if the ratios remain fairly constant. If they do, I would believe that our local market is not over supplied.
I heard an interview this morning on Bloomberg TV in which the interviewee cited the cause of the reported decline in housing prices to be "surplus inventory". As in the sale of most commodities, supply and demand do factor into the determination of prices. However, while the number of active listings has risen since January 2010, we are still under the historical numbers for available properties.
Since 2008, when the "Great Recession" hit the construction industry, very few new tract homes have been built. In fact, an inquiry at the the local building department resulted in a finding of no single family housing tracts being processed.
At the present rate of absorption of active inventory, it is even possible that we will find resale homes in short supply. Yes, I am aware that there is a so-called "shadow inventory" of bank owned homes or soon to be bank owned homes, but this "gorilla-in the-room" has failed, as yet, to materialize.
It will be interesting to me when I do the numbers of active listings and listings in escrow to see if the ratios remain fairly constant. If they do, I would believe that our local market is not over supplied.
posted by shirley harry at 7:59 AM
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