Bullish Or Bearish Sign For Real Estate With Recent Inventory Increase?

Posted by John Sabia on Thursday, October 18th, 2018 at 12:10pm.

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Is the increase in Inventory a Bearish or Bullish Indication?

a recent Realtor.com article reported New listings increased by 8% year-over-year across the nation, the largest increase since 2013. Also reported, The total listings in the 45 biggest real estate markets are now up 6% on average as compared to last year.

This housing inventory increase has triggered two different reactions. Some folks are concerned that this signals a potential collapse, while other folks believe it is a welcomed reprieve from the lack of inventory that many markets have experienced.

In a recent 'Z Report by Zelman & Associates, "with the rate of home appreciation starting to decelerate alongside the uptick in inventory, we exect significant debate whether this is a bullish or bearish sign."

Does this signal a market crash?

some folks interpret the increase in inventory as a sign we are returning to the real estate market we experienced last decade. However, a closer analysis reveals inventory levels are not at all similar to the levels reached before the market crash in 2008.

A normal balanced market would be six months of inventory; however, the most current National Association of Realtors Existing Home Sales Report reported that "unsold inventory is at a 4.3 month supply at the current sales pace up from 4.1 months a year ago."

During the last decade, real estate price quickly began to depreciate in June 2007. During that time, we experienced a 9.1 month supply (more than twice the supply of today) and inventory kept rising uintil it reached a top of 11.1 months in April 2008.

With the current buyer demand levels, we are not likely to see increases in months of inventory supply. Danielle Hale, Realtor.com's Chief Economist explains, "After years of record-breaking inventory declines, September's almost flat inventory signals a big change in the real estate market. Would-be buyers who had been waiting for a bigger selection of Homes for sale or condos for sale may finally see more listings materialize. But don't expect the level to jump dramatically. Plenty of buyers in the market are scooping up homes as soon as they are listed, which will keep national increases relatively small for the time being."

SO WHAT DOES THE INCREASE IN INVENTORY MEAN?

Many home-buyers who had been unable to fina a home or lost out to buyers with stronger offers may finally be able to reach their home ownership goal.

From the 'Z Report, "In our view, the short-term narrative will probably be confusing. But more sustainable growth and affordability will likely be the end result."

IN CLOSING

If you are either a first-time or secont-time buyer who has given up on finding your dream home, contact me today to see if new listings are available in your chosen location.

Disclaimer:The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. John Sabia PA and Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. John Sabia PA and Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

John Sabia

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