July 2021

Hope in the midst of historic home inventory shortages

Region/CBSAYoY % Change in Active ListingsActive Listing Count (March 2021)Active Listing Count (March 2020)
new york-newark-jersey city, ny-nj-pa-16.88%53,37164,212
los angeles-long beach-anaheim, ca-19.66%12,74315,862
chicago-naperville-elgin, il-in-wi-48.18%15,35729,637
dallas-fort worth-arlington, tx-69.00%5,59618,052
houston-the woodlands-sugar land, tx-52.35%12,44926,124
philadelphia-camden-wilmington, pa-nj-de-md-45.81%7,17313,237
washington-arlington-alexandria, dc-va-md-wv-34.69%6,2649,591
miami-fort lauderdale-west palm beach, fl-41.98%27,05646,636
atlanta-sandy springs-roswell, ga-60.44%13,55834,272
boston-cambridge-newton, ma-nh-36.74%4,3476,872
san francisco-oakland-hayward, ca-12.45%3,4743,968
detroit-warren-dearborn, mi-55.87%4,53010,266
phoenix-mesa-scottsdale, az-62.40%3,7429,952
seattle-tacoma-bellevue, wa-42.64%2,4624,292
minneapolis-st. paul-bloomington, mn-wi-46.07%4,3898,139
riverside-san bernardino-ontario, ca-64.69%3,98911,297
tampa-st. petersburg-clearwater, fl-69.92%3,77512,551
san diego-carlsbad, ca-26.63%3,1494,292
st. louis, mo-il-43.94%3,6396,491
denver-aurora-lakewood, co-48.71%2,2524,391

As the map illustrates, large declines in active inventories have become a national phenomenon, but regional and metro markets still show marked variability.Footnote1

Regionally, the South leads with the sharpest year-over-year (YOY) active inventory reduction of 58%, followed by the Midwest with 52%, the West reporting 49% and the Northeast just under 38%.Footnote1 Prominent metro markets are equally mixed, with YOY active inventories in Tampa, Dallas, Phoenix and Atlanta down at least 60%, while the least extreme in our review — San Francisco, New York and Los Angeles — are down less than 20%.Footnote1

Nationally, average active inventories dropped 52% YOY in March.Footnote2 This shortage is due in part to consequences of the pandemic, including baby boomers waiting to list their homes,Footnote3 ongoing concerns of economic uncertainty,Footnote3 and considerable delays in new home construction.

Listing agents remain busy

Eager homebuyers — especially millennials and Gen Xers — are actively looking to purchase virtually any available home, girding themselves for a bidding war or anxiously waiting until the hot seller’s market cools. With four offers being made on each home sold,Footnote4 the inventory shortage has helped increase the national median listing price in March by 15.6% YOY to $370,000.Footnote2

Homes are in short supply

In terms of historical averages, the housing shortage has been a lingering issue dating back to the housing crisis of the Great Recession.Footnote5 A recent report from Freddie Mac noted that the market needs to create 3.8 million single-family homes to meet current demand.Footnote6 After that, builders will need to construct at least 1.1 million single-family homes each year to keep up with market demand.Footnote6

...but with some relief in sight

The current situation can be seen through a more optimistic lens as well, with 69% of expert panelists in a Q1 2021 Zillow Home Price Expectations survey predicting inventory will begin growing in the second half of 2021 or the first half of 2022.Footnote7 Contributing factors include:

  • Builders showing signs of ramping up construction, with nationally sold units up 64% YOY in March;Footnote8
  • Vaccinated boomers selling their homes at record-high prices and downsizing now or delaying their home purchase by renting an underpriced apartment;Footnote5
  • A percentage of homes in mortgage forbearance coming on the market through foreclosure or forced sale;Footnote5 and
  • A share of the seven million single-family rental homes owned by individuals, now motivated by steep profits to sell their second properties.Footnote5

With economists and industry experts continuing to debate the complex forces impacting inventories,Footnote7 the current home marketplace remains unpredictable but one where opportunities for real estate professionals still abound.

1 Source: Realtor.com residential listings database, Data dates: March 2020 to March 2021, Data Pulled: April 14, 2021.

2 March 2021 Monthly Housing Market Trends Report: Home Listing Prices Reach All-Time Highs. But How Much Higher Can They Go?, Realtor.com®, Sabrina Speianu and Danielle Hale, April 1, 2021.

3 "Housing Inventory Hits a Record Low: What It Means for Buyers," The Ascent, Maurie Backman, February 1, 2021.

4 "This Is the Big Leagues Here," Realtor® Magazine, National Association of Realtors®, April 7, 2021.

5 "Where Have All the Houses Gone?" The New York Times, Emily Badger and Quoctrung Bui, February 26, 2021.

6 "The US is 3.8 Million Homes Short," Realtor® Magazine, National Association of Realtors®, April 16, 2021.

7 "Experts: Work From Home is Here to Stay, and More Inventory is on the Way," Zillow®, Zillow Research, April 14, 2021.

8 The Census (2021), New Residential Sales March 2021 Release, 2020-2021. Accessed April 2021.

MAP3629818 | 06/2021

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