Why is low inventory good
What does low inventory mean and why are we experiencing it?
good afternoon I'm Jim Smith real estate
broker with Remax terror soul here in
Huntington Beach today is the first
video in a series where I address common
questions that I received from buyers
and sellers alike today's question is
what does low inventory mean and why are
we experiencing it if you have been in
the real estate market as a buyer or
seller for the last four years or so you
have likely heard someone say something
along the lines of inventory is so low
let's start by addressing what they mean
by saying inventory inventory is the
supply of active homes on the market
that are available for sale at any given
time now that we have talked about what
inventory is let's take a minute and
talk about what low inventory means low
inventory means that we have strong
buyer demand people looking to buy homes
and because there are more buyers than
there are sellers this causes an
imbalance creating a shortage of
available homes for sale so what causes
the shortage of inventory a lot of the
professionals out there think that the
shortage of available homes has to do
with the restrictions placed on new home
builders after the economic collapse in
07 because new home builders aren't
building more homes to keep up with the
amount of buyers coming into the market
coupled with resells of existing
homeowners this started as a shortage of
available homes in a normal balance
market we keep about a six to seven
month supply of homes available for sell
over the last four years or so we've
been around a two-month supply of homes
which is not enough to keep up with
current buyer demand usually during the
start of the spring market we start to
see our inventory increase but this year
is a little different as we are seeing
just as many homes go into escrow is
there coming on the market which is
causing our image are available
inventory to stagnate leaving buyers
wondering if they will ever find the
perfect home the biggest problem we are
facing with regards to available homes
is that those sellers who are wanting to
sell are looking at available homes to
purchase and are hesitant to pull the
trigger worrying about not having a
place to go if their home does go into
escrow this again creates a catch 22
because if sellers aren't willing to put
their homes on the market then inventory
will likely continue to stay low until
something happens either with rising
rates or some major economic issue
neither which I expect to take place
anytime soon as always I appreciate you
taking the time to watch if you have a
question
and that you would like me to address
please email me directly by going to my
website Jeff Smith net thanks again for
taking the time to watch and I look
forward to seeing you again next month
[Music]
