The real estate inventory is super low…. and it isn’t going to get better any time soon. That is scary news for today’s homebuyers.
My favorite real estate data geek is Mike from Altos Research. His data is accurate and understandable and he speaks English, not crazy MBA speak.
The video below is Mike’s monthly market report for the nation. It was created for real estate professionals, but I think you’ll find it very interesting. Or, scroll down to see my notes.
The housing inventory is crazy low across the nation and it is just as bad in our local Glendale area.
The United States is down 60% from our new normal inventory levels, set five years ago. Back then, in 2015, we thought a million homes on the market in January was crazy low inventory! Today we are looking at a hair over 400,000 homes on the market.
Why is real estate inventory so low?
The answer is complex, but Mike pointed out something that is head-slapping obvious. People aren’t selling their “old” homes like they used to. Interest rates are super low, equity is super high, and the rental market is strong, So they are keeping their “old” house as a rental investment property when they upsize, downsize or relocate.
7 million US homeowners decided to keep their old homes and rent them out in the last decade. This is about 7% of the stock and you can see the impact on housing inventory, here:
Housing Inventory in Greater Los Angeles Area
I know you want to know what the housing inventory looks like in your local neighborhood, but we need to look at a larger data sample to really understand real estate trends. The interactive chart below represents available homes for sale over the greater Los Angeles metropolitan area.
The real estate inventory is down by 70% in the Greater Los Angeles Metropolitan Area.
Holy Tomatoes, Batman!! No wonder you can’t find a home to buy. It is now clear why home prices are sky-high. Drag your cursor along the trend line to see actual housing inventory levels in any given month over the last 5 years. It’s fun…. but scary.
What Should Homebuyers Do?
An active homebuyer might choose to give up… but is that really the right answer? Real estate continues to be the best wealth-generating vehicle available to most Americans. Low-interest rates, rising real estate values, and tax incentives can equal a sizable nest egg in ten to fifteen years. When you add rising rental rates it seems crazy NOT to buy a home.
But, one should stick to a budget that is sensible. The key is understanding the difference between sensible and comfortable! Consult with a financial advisor or tax professional to understand what makes sense for your personal financial goals.
If your sensible budget is not enough to buy your dream home, start thinking outside of the box. Stay tuned to this blog as I am working on a post all about out of the box ideas!!
What Should A Homeowner Do?
If the time is right for you to get to your next home, I would like you to sell your home. With me 😘. But, I bet you have a Big Fear.
You are afraid to sell before you find the right home.
This is a very sensible fear! If you need to sell in order to buy you are worried that selling first will be a big mistake. Prices might escalate out of your budget while you search for the right home.
I have an awesome no cost solution… but I have disappointing news. I won’t publish it, here. You’ll need to talk to me to get details. Or, sign up for my regular newsletter here: http://vid.us/uxhbdu
Have You Considered an ADU?
An ADU is a great solution for both upsizers and downsizers. Upsizers can use an ADU for remote working and flexible space. Downsizers might consider an ADU as primary living space while renting out the original home for a tidy income.
Check out ADU DIGGS – a fabulous pre-manufactured ADU solution that gives you a convenient, done-done unit in a fraction of the time it would take for traditional construction.