When you have a feel for what is going on in your local market, it’s always nice to see that confirmed in a similar trend nationwide. Lawrence Yun (chief economist of the National Association of Realtors), in the August issue of Realtor Magazine, had some interesting comments on the diminishing real estate inventory and the effect this will have on prices.
Nationwide Real Estate Trends
According to Yun, the inventory of homes for sale nationwide peaked at 4.5 million units in 2007, which, in part, fueled the subsequent big drop in home prices. Today we have the opposite problem: there are only 2.9 million homes for sale despite an increasing demand.
At this point in a discussion of housing inventory, the idea of “shadow inventory” comes up. This is the large pool of distressed homes that are (or will be) foreclosed upon and which it is feared may flood the market.Yun feels this is no longer the threat that it once was.
While delinquent mortgages remain high at 7%, their share of the market is down from a peak of 10% in 2009. He suggests this data means further declines in inventory unless new construction begins, which is difficult in the current lending environment.
He points out that housing starts have been running at an annual rate of 700,000 since the beginning of the year, which is less than half the average rate over the past 50 years.
Local Big Island Real Estate Trends
Short of another recession, the increased demand for housing combined with continued low inventory is bound to put upward pressure on prices. Here on the Big Island we have seen that begin to take place. Just as a case in point, as of today there are only 36 condos on the market in the entire Waikoloa Beach Resort and we are now seeing multiple offers on some properties at higher prices.
When our clients ask about the market bottom here, our opinion is that it has already happened. We are slowly seeing prices start to tick up as buyers, who want to take advantage of historically low prices, compete for the great deals that are available.