WSJ - lack of attractive inventory
The housing market, which has struggled with an oversupply of homes for
years, is facing a new problem: a lack of attractive inventory. There were more than
2.19 million homes listed for sale at the end of September, down 20% from a
year earlier, according to a new report from the real-estate website
Realtor.com. That is the lowest level since the company began its count in
2007. The report is the latest sign of
how the US housing market can't seem to catch a break. While falling
inventories are typically a sign of health, because reduced competition can
boost prices, that isn't the case right now.
Instead, real-estate agents say, people are pulling their homes off the
market rather than try to sell them at today's discounted prices. At the same
time, banks have been more slowly moving to take back properties through
foreclosure ever since processing irregularities surfaced last fall,
temporarily reducing the supply of foreclosed properties. The shrinking supply
isn't driving up prices because demand is soft.
Yet there is still a
substantial "shadow" supply of foreclosures and other distressed
homes, estimated to be more than one million, that is likely to stream onto the
market in the coming years. The pent-up supply is another constraint on any of
the price gains that might normally occur when supply falls. The decline in inventory also suggests that
there are fewer opportunities for buyers and sellers to strike deals. That can
further chill sales, as buyers become afraid to overpay while sellers are
similarly cautious about under-pricing their homes. In Detroit, the inventory of homes for sale was down by 28% from a year
earlier, according to Realtor.com. Listings were down by 49% in Miami, by 48%
in Phoenix and by 46% in Orlando, Fla. Housing inventory was down from one year
earlier in all 146 markets tracked by Realtor.com except for Denver and El
Paso, Texas. The Realtor.com data
include only single-family homes, townhouses and condominiums listed for sale
on more than 900 multiple-listing services across the country. They don't
include unsold homes listed as "for sale by owner" or other
properties that don't find their way onto the multiple-listing services.