No One Predicted the Current Housing Market
SANTA CLARA, Calif. – In November 2018, higher mortgage rates and increasing inventory characterized the U.S. housing market. This November, the number of homes for sale fell nearly 10% year-over-year in a market as a return of low interest rates spurred increased demand, according to the November 2019 Housing Trends report by realtor.com.
“As millennials – the largest cohort of buyers in U.S. history – embrace homeownership and take advantage of this year’s unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish,” says realtor.com Senior Economist George Ratiu. “The housing shortage is felt acutely at the entry-level of the market, where most millennials are looking to break into the market for their first home. The issue is further compounded by the fact that sellers tend to be more reluctant to list during the colder time of year when the market typically makes a seasonal slowdown.”
Based on realtor.com’s listing data, the shortage of available homes for sale is accelerating. Overall, inventory declined 9.5% in November, compared to October’s drop of 6.9%.
November’s inventory declines amounted to a loss of 131,000 listings nationwide, compared to this time last year. In the nation’s 50 largest metros, inventory declined by 8.8% year-over-year. Additionally, the volume of new listings hitting the market has decreased by 7.7% since last year, adding to the nation’s inventory woes.
In the four Florida markets included in realtor.com’s study, two saw a for-sale inventory decline greater than the national average, and two had a decline that’s less than the national average.
At the top of the list, the Tampa-St. Petersburg-Clearwater metro saw a 13.3% year-of-year drop in inventory, though median days on the market increased by three days. In Orlando-Kissimmee-Sanford, inventory dropped 11.7%, and days on the market increased by one day.
Jacksonville came closest to the national 8.8% average, with year-to-year inventory falling 7.8% and days on the market falling by -3%. In the Miami-Fort Lauderdale-West Palm Beach metro, inventory fell 7.2% and days on the market increased by 5 days.
Entry-level home challenge
Finding an affordable home remains one of the largest obstacles to homebuyers. The U.S. inventory of homes priced below $200,000 decreased by 16.5% year-over-year in November, up from the 15.2% decrease seen in October, though inventory decreases were the norm across all price points in November.
Mid-tier inventory priced between $200,000 and $750,000 decreased 7.4% year-over-year compared to October’s year-over-year drop of 4.3%, while high-end inventory priced above $1 million decreased 1.7% year-over-year compared to October’s year-over-year increase of 1.3%.
“The inventory decreases seen across all value ranges could in part be attributed to a spill-over effect, as the lack of inventory has pushed buyers up the price chain to stretch their budgets and search for homes above their initial price target,” Ratiu says.
The metros with the sharpest drops in inventory were San Diego (-28.1%); Phoenix (-24.1%); and Rochester, N.Y. (-22.4%). Only four of the 50 largest metros saw inventory increases year-over-year. The largest inventory increases were in Las Vegas (+14.4%); Minneapolis (+11.5%); and San Antonio, Texas (+7.2%).
Facing even fewer options than last year, eager buyers are acting quickly to close on the few homes that are available. During November, home sold in an average of 70 days nationally – two days more quickly than last year.
Meanwhile, national median home prices have yet to adjust to recent inventory declines after a multi-month run up in inventory earlier this year. The median U.S. listing price grew by only 3.6% year-over-year, to $309,000 in November – less than the 4.3% year-over-year increase seen last month.
© 2019 Florida Realtors®