Editor’s note: In this four-part series, we observe some of the latest changes taking place in housing markets – some subtle and some rapid. Read Part 1: Perfect home, perfect staging, imperfect market; Part 3: The end of multiple offers and Part 4: 10 signs of a changing housing market.

Housing inventory is creeping up – an indication that demand is not keeping pace with supply.

While the national unsold inventories of new and existing homes still remain at levels that indicate we’re still in a seller’s market, some local markets are reporting rapid signs of cooling.

“Our current inventory is almost twice now what it was in September of last year,” said Rob Emerick, president of Planet IDX, a real estate technology company based in Las Vegas, Nev. There were some areas of Las Vegas in which homes sold in one to three days – now it’s common for properties to remain on the market for a month or longer, he added.

“It’s not horrible, but in comparison it’s like night and day,” he said. “The buyers are simply not here. We don’t have as many people buying properties, and we have a lot more inventory available.”

Investors are apparently moving on from Las Vegas, possibly to the Phoenix-area market and farther east, Emerick added.

“Investors are dropping their inventory onto the market. Appreciation is tapped out so it’s not attractive to investors anymore. It started slowing down in about March – it really hit the wall in the last 90 days. We thought it might be a temporary thing. Now local Realtors are starting to say, ‘What’s going on here?'”

Some listing agents are offering a commission share greater than the traditional 3 percent of the purchase price to attract more offers on for-sale properties, he said, adding that the number of above-3 percent commission offers to buyer’s agents has more than doubled in the past year. “I’ve seen listings with 5 percent (share). Last year this was unheard of. It’s a complete reversal.”

Another indicator that the Vegas real estate market is chilling – the number of people who are searching for area homes online has dropped by about one-third in the past 12-18 months, he said, based on online search statistics.

There are some counter trends though, that paint a prettier picture of the housing market. Emerick noted that home prices have continued to rise in the Vegas-area market. The California Association of Realtors reported a record median price for existing homes in August, and the second-strongest August sales rate for existing homes on record since 1979. And nationwide, the National Association of Realtors reported the second-highest sales pace on record for existing homes in August.

But the national unsold housing inventory of existing homes has crept up about 13 percent from August 2004 to August 2005 – and 33 percent from January 2005 to August 2005. The estimated available supply of housing has grown 4.4 percent from August 2004 to August 2005 and 24 percent from January 2005 to August 2005.

The National Association of Realtors estimates that a housing market is roughly in equilibrium between a buyer’s market and a seller’s market when there is a six-month supply of homes, which means at the current sales rate it would take six months to exhaust the current supply of homes. In January, the association estimated a 3.8-month supply, and that supply stood at 4.7 months in August.

As for new homes, the U.S. Census Bureau and Department of Housing and Urban Development estimated that there was a 4.7-month supply of new houses for sale available at the end of August 2005 – the highest level on record since June 2000, when it reached 4.8 months. But the estimate is based on a far smaller sample of data than the existing-home report, and for most of the year the supply estimate has hovered around a supply of 4.1 to 4.4 months.

Inventory surges also have been reported in parts of Florida, the Boston metro area and in New York’s Long Island and Queens, among other areas.

Fran Vernon and Rowena Emmett, Realtors at Dilbeck Realtors GMAC Real Estate in La Cañada, Calif., say they haven’t seen a spike in inventory, and well-priced properties still fetch multiple offers, though “it seemed quieter this year in August.” They also noted, “We have read about other areas being impacted, but we have not experienced any kind of discernable lull in fall activity. We feel the indicator will not be until spring, when we see if the buyers are still out there.”

Mary Pope-Handy, a Realtor for Intero Real Estate Services in California’s Silicon Valley region, noted that the market in her area changed “considerably” in August, with prices softening despite a thin inventory. “Lots of homes are ‘sitting,’ getting one offer or none. Sellers still think everything will get overbids and be ‘as is’ and every buyer will grovel with gratitude that their offer was accepted,” she said.

Real Estate Economics, a real estate consulting and market research company based in Laguna Nigel, Calif., reported that existing-home sales dropped 17 percent in Sacramento County, Calif., from March 1 to Aug. 31 of this year, compared to the same period one year ago. Prices, meanwhile, climbed 20.4 percent – after a 26.5 percent gain during the same period last year.

For San Diego County, Calif., existing-home sales dropped 10.8 percent from March 1 to Aug. 31 this year compared to the same period last year, also according to Real Estate Economics data. Home-price appreciation has slowed markedly though – with a 6.5 percent gain this year for the period of March 1 to Aug. 31 compared to a 27.2 percent gain during the same period last year.

And in the Clark County, Nev., area that includes Las Vegas and Henderson, sales were down 20.8 percent from March 1 to Aug. 31 this year compared to the same period last year. Last year during that period, sales were up 48.2 percent over the prior year.

While the housing boom has slowed in some local markets, the National Association of Realtors expects a record number of existing-home and new-home sales this year. Hurricanes Katrina and Rita have put a dent in the overall housing supply and boosted regional sales activity while sending ripples across the country. The Red Cross has estimated that about half a million homes were destroyed and damaged by Hurricane Katrina, and economists are revising national home sales forecasts to account for a short-term jump in sales activity.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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