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


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