Shrinking inventory means turn toward seller’s market

As the list of available homes shrinks, the local market is turning from a buyer’s market to a seller’s market, officials said. (Photo: Staff)

Shrinking inventory in Chattanooga has signaled an increasingly strong housing market.
“That’s a huge positive—it’s a huge sign of recovery,” Brandi Pearl Thompson, broker associate with Keller Williams Realty in downtown Chattanooga, said.
Now, it’s a seller’s market, she said.
The most recent numbers show that in March, the amount of local inventory—meaning the number of homes listed for sale—decreased by 9 percent to 4,707 homes, according to the Greater Chattanooga Association of Realtors.
And according to the Federal Reserve Bank of Atlanta, that trend holds true around the Southeast.
Nearly all brokers indicated that home listing inventories in March were lower than the same time last year.
“Low listing inventories continued to restrain home sales and generate multiple offers for properties, particularly at the low end of the market,” according to the Federal Reserve Bank of Atlanta.
Seller’s market
Last March, there was a housing inventory of 10.4 months, Thompson said.
For March 2013, it was down to 8.4, and a seven to eight month’s supply is when the market shifts from a buyer’s market to a seller’s—although separate areas of town might differ slightly, she said.
“It’s currently a multiple-offer situation if it’s priced right and in good condition,” she said.
She recently had a home that had been on the market since January get multiple offers.
What that means for buyers is more competition.
“You’re looking at a limited supply of homes with just as many buyers, if not more,” she said.
A lot of buyers who had been on the fence recently because of uncertainty created by the presidential election or debt ceiling situation are now feeling a little more confident, she said.
And according to the National Association of Realtors, inventory nationwide is down.
The group reported on April 25 that the supply of homes for sale was down 17 percent compared to the year before.
New building? Out-of-state investors?
A limited inventory means builders need to start new projects. Nationally, that may be difficult, Lawrence Yun, chief economist for the National Association of Realtors, said.
He told CNBC that builders need to ramp up projects by 50 percent to meet demands, but that will be challenging because of land and labor shortages.
But locally, Thompson said builders should be able to start new projects.
She also said that she is getting calls from out-of-state investors who are interested in the local market, in part because of home prices rising in other areas.
“The investor market from out of state has really come back,” Thompson said.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s