Back in November, we commented that housing inventory had dropped to new lows in the fall with just 2.4 months of inventory. Reminder: housing inventory is calculated as a moving target, taking into account the average number of homes sold in a month and extrapolating that out based on how many total listings there are in a given area – i.e. if 10 houses were sold in December, and there are 100 listings, that would mean there is 10 months of existing inventory.
In December, the inventory dipped down to just 2 months, with only 2,945 homes for sale in December according to the Northwest Multiple Listing Service. This number is 46% fewer than in December of 2011. The fact is that people were shocked this number below 4,000 (first time since 1999) and to see it dip below 3,000 is honestly amazing.
Typically, the holiday season does see a downturn in listings, but last time I checked there was a holiday season in years past, so that does not completely account for the extraordinarily low numbers we are seeing this year. It is true that bank-repossessed homes are making up a smaller percentage of total sales than one year ago as the market rebounds.
In any case, it is clear that the low inventory is playing a role in driving up home prices, which is up 19% from this time last year. It is predicted that inventory should increase in coming months as home prices continue to rise. People who have been reluctant to sell because their homes are underwater may be able to recoup some of the lost value and finally be able to sell.
The bottom line is that buyers and investors are literally standing by waiting to make offers on homes when they go on the market. If you were ever thinking about selling your home, the time is now.