All eyes are on inventory as we enter the busiest homebuying season of the year. According to the Home Value Forecast released by Pro Teck Valuation Services on Tuesday, the Months Remaining Inventory on the market has dropped more than 14 percent over the last year and 25 percent over the last two.
In 2015, the weighted average inventory was 7.87 months; last year, it was 6.89. As of today, it is just 5.90. This steep drop is going to have a big influence on the market in the coming months, according to Pro Teck CEO Tom O’Grady.
“The lack of inventory is very real and could have a severe impact on home sales in the months to come,” O’Grady said. “Traditionally, a balanced market would have an MRI between six and 10 months. This month, only eight metros we track have MRIs over 10, compared to 27 last year and 48 two years ago—illustrating that this lack of inventory is not being driven by traditionally ‘hot’ markets, but is rather a broad-based, national phenomenon.”
According to Pro Teck, the recent lack of inventory is result of a number of factors, including “the reduction of new housing starts post-crisis, investors buying and now renting homes, and the lack of equity and/or rising interest rates keeping people in their homes longer than anticipated.”
Even the nation’s top single-family markets, as ranked by Pro Teck’s report, saw declines in MRI. The strongest metros, according to the report, were largely based in the Northwestern U.S. The top 10 included: Mount Vernon-Anacortes, Washington; Bremerton-Silverdale, Washington; Portland-South Portland, Maine; Omaha-Council Bluffs, Nebraska-Iowa; Nashville-Davidson-Murfreesboro-Franklin, Tennessee; Bellingham, Washington; Sacrament-Roseville-Arden-Arcade, California; Colorado Spring, Colorado; Stockton-Lodi, California; and Seattle-Bellevue-Everett, Washington.
Seattle-Bellevue-Everett had just a 1.75 MRI—the lowest of all metro areas measured.
“Seattle has a dire need for more single-family, moderately-priced homes,” the report stated, “as supply has not kept up with demand, leading to limited inventory and increasing prices. While more multi-family homes are being built, single-family home starts are still at a fraction of pre-crash levels.”
The bottom metros were largely southern and included: Las Cruces, New Mexico; Mobile, Alabama; Huntsville, Alabama; Virginia Beach-Norfolk-Newport News, Virginia-North Carolina; Miami-Miami Beach-Kendall, Florida; Chicago-Naperville-Arlington Heights, Illinois; Shreveport-Bossier City, Louisiana; Killeen-Temple, Texas; McAllen-Edinburg-Mission, Texas; and Scranton-Wilkes-Barre-Hazelton, Pennsylvania.
According to the report, the Scranton area makes the report as a result of a stagnant jobs market and lots of foreclosures.
“The Scranton–Wilkes-Barre–Hazleton, PA CBSA is in our bottom 10 this month, as higher foreclosures and longer days on market stall any significant price gains. The area lost a considerable number of jobs post housing crisis, and while some job growth has happened, home prices have been relatively flat over the last ten years.”