Homes are selling fast in the United States, typically on the market for just 77 days and leading to severe supply issues, the latest analysis report suggests.
Across the country there were 9% fewer homes for sale in May 2017 with the market recording the greatest drop in inventory since August 2013 when inventory was down more than 10%, according to the report from real estate firm Zillow.
Columbus in Ohio, San Jose in California and Minneapolis reported the greatest annual declines in the number of homes for sale, with about 30% fewer homes on the market in each.
In San Diego, there are 26% fewer homes on the market than a year ago, and 22% fewer in Seattle. Both San Diego and Seattle have high buyer demand and home value growth of over 6%, the report points out.
The report also shows that the median home value across the country is up 7.4% to $199,200 compared to a year ago. Seattle, Dallas and Tampa, reported the highest year on year home value appreciation among the 35 largest metros.
In Seattle, home values rose almost 13% to a median value of $440,100 while home values in Dallas and Tampa are up about 11% since this time last year.
Median rent across the nation rose 0.7% year on year to a median of $1,416 per month. Seattle, Sacramento and Los Angeles reported the greatest year on year rent appreciation among the 35 largest metros. Rents in Seattle are up almost 6%, in Sacramento up 4.5% and in Los Angeles up 4%.
The report explains that when the housing market crashed, many Americans went from owning single family homes to renting them and between 2005 and 2016, the number of owner occupied single family homes fell by 680,000, while the number of renter occupied single-family homes increased by 6.2 million.
It says that this increase in the number of single family home rentals is one of the reasons why inventory remains low. The amount of new construction coming available hasn’t been enough to offset the subtraction of more single family homes being converted to rentals. Rental homes are put for sale less frequently, which creates more options for renters, but fewer for buyers.
‘Inventory has been falling for years with supply no longer meeting demand, and there are multiple reasons for the worsening situation. On the demand side, simple demographic change is contributing to incredibly high demand as millennials reach their prime home-buying years and begin to enter the market in droves,’ said Zillow chief economist Svenja Gudell.
‘This is coupled with relatively low levels of new home construction on the supply side insufficient to keep pace with demand, and what is built is largely priced beyond the reach of many of the first time and entry level home buyers in the market. Thousands of single family homes that were once bought and sold every few years prior to the recession have now been converted into rental properties by investors, trading hands much less frequently and further contributing to inventory shortages,’ she explained.
‘In some still hard hit markets, negative equity is likely keeping many home owners of lower end homes from listing their home for sale because they can’t afford to profitably do so. There is no silver bullet that will clear the market of all of these issues, and buyers frustrated by the status quo will likely have to remain patient and be ready to pounce once that perfect home does become available,’ she added.
