Housing inventory has continued to drop in 2012, with year-over-year declines in May at 21 percent.
Inventory levels in the U.S. housing market are down 21 percent from last May, according to the newest statistics from Pro Teck Valuation Services.
A real estate valuation firm based in Waltham, Mass., Pro Teck said many of the most depressed local markets in the nation have been seeing increased home sales accompany the falling inventories.
Michael Sklarz, principal of collateral analytics for HomeValueForecast.com, singled out Michigan and Illinois in a HousingWire piece, saying that those states are defying their reputations as “foreclosure-riddled states” and have been making substantial strides in reducing their inventories.
Tom O’Grady, the president and CEO of the firm, said that the inventory/sales relationship is a significant one.
“One of the most important developments in the past year for the residential real estate market has been the significant decline in the inventory of homes for sale,” he said. “Nationally, the number of homes currently listed are down 21 percent from a year ago.”
Nancy Iliffe, a Realtor at Shelton and Stewart Realtors in South Miami and member of the Master Brokers Forum, said the declining inventories in Miami (they’re down more than 40 percent from last year) have created a huge shift in demand.
“In the month of May, I’ve had three closings,” Iliffe said. “All three went under contract in less than a week.”
In the face of such demand, Iliffe said it’s imperative that not only her clients be educated of the buying process, but that agents be checking the MLS constantly so they are effectively aware of the latest homes for sale.
Prices, though, have yet to catch up. Iliffe added there has been a major price correction in the Miami area, and sellers are finally beginning to wake up to that fact.
“That has been a long time coming, that mentality,” she said. And now, with homes priced accordingly (aka low with the rest of the market), that is stimulating demand even further.
Interpretations differ on how many months supply represent a healthy real estate market, but the consensus is generally around five to six months. In its analysis, Pro Teck stated that five months or less indicates a strong market, and the U.S. market’s current level of 6.3 months is its lowest level in six years.