Housing inventory is still on the decline: How is it impacting your business?

Has a shortage of homes on the market been impacting your real estate business?

Realtor.com® reported that there were 11 percent less homes on the market in June 2017, compared to June 2016. This is 24 consecutive months of year-to-year inventory decrease. Due to the lack of inventory, home prices are also up, selling at 9 percent more in June 2017 than last June.  The median list price is $275.000, up 9 percent from last year as well.

PAR President Kathy McQuilkin said in Chester County, inventory is low, especially in the median and lower price ranges. “The first quarter of 2017 versus the first quarter of 2016 exhibits 13 percent lower inventory. Additionally, in the first quarter 2017 versus the first quarter of 2016 shows approximately a 4 percent increase in the median price to the current $308,500 quarter-over-quarter price. Median and sub-median priced homes have the greatest chance of seeing multiple offer situations with this challenging inventory situation,” she said.

PAR Treasurer Bill Festa agreed that low inventory has been an issue.

“Low inventory is a big negative in our area. For the sellers who are selling, it’s been great, but buyers are overbidding, and getting back to using the dreaded escalation clause and multiple offers is not at all uncommon. We are seeing this in the majority of the Philadelphia market and the few times I’ve sold homes in Delaware and Chester Counties, I experienced the same thing. My own son-in-law and daughter, in order to end the merry-go-round of lost properties, ended up paying $10,000 over asking and they weren’t even the highest bidder, it’s just that they had better terms,” he said.

On average, properties remain on realtor.com® for 60 days, a decrease of five days or 8 percent compared to June 2016.

“In the suburbs of Philadelphia, the low inventory is having a major effect on pricing and buyers. The low inventory is driving up prices, which is good for sellers, but multiple offers on new listings is commonplace. I am finding the buyer community getting very frustrated in their search. It’s a shame when you have three buyers who want to buy, but only one property to bid on,” said PAR First Vice President Bill McFalls.

PAR President-elect Todd Umbenhauer echoed others’ concerns. “As is the case in many markets across the state and around the country, real estate sales in Bucks and Montgomery Counties are quite brisk, resulting in lower than typical housing inventory. Buyers looking for homes in the average price range do not have a lot of options from which to chose. Bucks County had a 3.5 month inventory supply in the first quarter of 2017, with Montgomery County experiencing virtually the same with a 3.4 month supply. A six-month inventory is considered to be a balanced market, so these numbers reflect very low inventory. And while it is not a comfortable position to be in, many times the decision to purchase must be made while standing in the living room of the home under consideration. Multiple offers are not uncommon, with some sellers receiving more than the listing price as a result,” he said.

Umbenhauer cited recent statistics from TREND MLS to prove his point. In the first quarter of 2017, there were 2,329 homes for sale in Bucks County, representing a 27.2 percent decrease over the same period last year, he said. Montgomery County’s numbers were similar, with 3,083 homes for sale, reflecting a 23.1 percent decrease from a year ago. “The average property marketing period fell in both counties, with Bucks County properties averaging 86 days on market, a reduction of 15.6 percent from the first quarter of 2016, with Montgomery County experiencing almost identical results, 84 days on the market representing a drop of 15.5 percent from a year ago. It is important to note that those are average days on market,” he added.

“There are many homes that are selling in a matter of days, if not hours,” emphasized Umbenhauer.