As of this spring, the supply problem was making another comeback.
The number of homes and condos for sale on May 1 dropped 13 percent from a year ago, which is the biggest year-over-year decline since Dec. 2012, according to the latest monthly housing report released this week by Arizona State University’s W.P. Carey School of Business.
Supply is especially low for homes priced under $200,000, which forced frustrated buyers into bidding wars and has given sellers the upper hand. Michael Orr, W.P. Carey’s housing expert and author of the monthly housing reports, said that likely won’t change for a while.
“Much of the inventory of homes in this price range was snapped up by landlords during the great foreclosure wave of 2008-2013 and hardly any of these homes are being released into the market,” Orr said. “Occasionally a large investor will sell a large block of rental homes, but almost inevitably they are purchased in bulk by another large investor and do not come back onto the open market.”
Demand, on the other hand, has seen a significant boost since February. In the months prior, weak demand had plagued the market.
Sales in April were up 9 percent year-over-year and dollars spent on those sales climbed by 14 percent.
Orr said this is largely because so-called boomerang buyers, or those whose credit has been repaired after a foreclosure or short sale several years ago, are starting to buy again.
“This should correspond to the foreclosure wave, which grew between 2008 and 2013, peaking in 2010,” Orr said. “It is likely to be a factor in the market for quite a while and reach a peak in 2017 and 2018.”
If Millennials eventually follow suit, as some housing experts predict, and especially as loan underwriting standards ease, buyer demand should keep improving for the next few years.
By Kristena Hansen at 91.5 KJZZ