Welcome to the New RealTown! Submit Feedback
Member Login | Join RealTown
The Real Estate Network

Why are there so few homes coming onto the market?

Jun. 12, 2012

A Fannie Mae/Freddie Mac mortgage services representative during the Help for Homeowners Community Event


For people looking to buy a home, pickings are slim these days. The number of existing homes for sale is at its lowest level in more than five years. In March the number of new homes for sale this spring was the lowest since the government started tracking the data in 1963, and rose just 1 percent in April. Inventories are so tight, buyers now face bidding wars in some cities.

Usually, low inventories would be a sign of strong demand, indicating that houses were selling as soon as they hit the market. Today’s low inventory, though, may not be the result of growing demand, but instead reflect a lack of supply—because some potential sellers aren’t putting their homes on the market at all.

In a new report, the housing data firm CoreLogic says inventory is low because so many homeowners have negative equity—they owe more on their mortgages than their homes are worth, so selling would not give them enough money to pay off their loans. CoreLogic analyzed data from the country’s 50 largest housing markets and found that areas with the lowest number of homes for sale also had the highest number of borrowers with negative equity. In markets where more than half of homeowners are underwater, there was just a 4.7-month supply of homes for sale. That’s about half as much inventory as in areas where less than 10 percent of homeowners are underwater.

It’s no surprise then that cities such as Bakersfield, Calif., and Phoenix have seen some of the sharpest decline in inventory over the past year, according to data from the National Association of Realtors. “The presence of negative equity … restricts the ability of owners to list their homes for sale as the demand side of the market improves,” Sam Khater, a senior economist at CoreLogic, says in the report.

Calculated Risk blogger Bill McBride says negative equity is part of the picture but adds that what consumers think about the direction of housing prices also plays a role. He argues that when people expect home prices to fall further, some sellers will rush to put their homes on the market. When prices seem to be stabilizing, McBride says, “sellers will wait until it is convenient to sell.” Buyers, meanwhile, will be more confident about shelling out money, so inventory will shrink. For McBride, there’s so little inventory because buyers and sellers now think prices are stabilizing and “are acting accordingly”—and that’s a sign of optimism.


If I can help you with any additional information regarding this article, or with any of your home buying or selling needs or if you know someone who would like some assistance, please feel free to visit my website to learn more about me www.AdrienneFrancis.com or text or call me at (201) 259-4449 .

User Comments

There are currently no user comments for this entry. Be the first to post a comment!

Write a Comment

Your Name:  RealTown Members: Click here to login
Your E-Mail: 
Your Website: 
Your Comment: 
To verify that you are a human and not a script, please enter the verification word from the image into the box on the right.

Basking Ridge Real Estate News

Basking Ridge, New Jersey

Find the latest homes for sale and home prices in Basking Ridge New Jersey


Your E-mail Address:
Subscribe to:

Recent Comments

RE: Weighing Costs and Benefits
Thanks a lot for the time...
RE: Time to get rid of the "Boob" Lights
This is a very interesting post. This a marvalous...
RE: So You Really Want to Buy a Place - But You Have Student Debt?
hello there and thank you for your info – I've ce...
RE: Want to know the square footage of your home? Here is how to do it.
I just started posting comments for blog and facin...