A different perspective: “Why is inventory the lowest in 20 years”
One of our AR friends from a previous time, wrote on the surface, a convincing article(on another National Real Estate Platform) and tried to explain “Why housing demand continues to outstrip supply, with shortages now at their worst in 20 years…”
This article is such an over simplification and totally disregards what is really happening in the housing industry, hence I would be remiss if I not address it.
Just to summarize the article in case you did not read it:
According to one survey the word is, that 63% of all homeowners are unwilling to move because their current house needs are met…. Then another survey was referenced, that 85 percent of boomers surveyed have no plans to list their home for sale in the next year because they love where they live…
The real story is:
- for the past sixteen to twenty years, there has been an outward exodus of jobs from our nation. To buy homes people, need to be assured that they can afford to buy them and more importantly to keep them.
- The economic downturn of 2007/2008 did little to reassure the potential buyers or sellers, rather it made them more cautious.
- The population has been increasing due to many reasons, such as immigration, illegal immigration and of course due to procreation.
- People are living longer.
- Banking regulations have been tighter to get mortgages.
- College loan debts are too high.
I am just scratching the surface, this in turn forced potential sellers to stay put. The above factors have also created an unprecedented demand for additional housing. The rest is simple economics: Supply & Demand. When there is a shortage of homes prices increase, clear and simple.
It is all about affordability and risk tolerance, NOT about loving and being comfortable where the home owners are living. The people who logically look at things tend to stay ‘safe’. Once home owners see, that it is safer to ‘buy up’ that that is when inventory will increase.
- Builder confidence has been weak, all indicators point to an increase in the confidence direction now.
- Life events dictate a certain portion of the home buying and selling process and that is just a fact, but it is not to moving force.
Americans love to buy homes, if there is a lack of affordable new construction people will stay put, period. The purpose of downsizing is to mitigate the loss of income and if it is more economically cost effective to stay in the larger homes than to downsize, there is no incentive for the aging population to move. Just as there is no incentive for the younger generation to leave the home of their parents.
This is an observation from a Beverly Hills Realtor, feel free to comment pro or con to my point of view.
Now if you are considering buying or selling a home please reach out to me directly!
If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 (m) or firstname.lastname@example.org or visit one of my websites at http://www.endrebarath.com. I am a Pet Friendly Realtor and I contribute a portion of my commission to local animal rescue organizations.