By KIMBERLEY HAAS
A lack of inventory continues to put pressure on the housing market but there are some potential sources out there.
During a mid-year outlook webinar held on Thursday afternoon, Todd Teta, chief product and technology officer for ATTOM, and Mike Simonsen, founder and president of Altos Research, spoke about the low supply of homes for sale. Simonsen said 2023 is projected to end with fewer homes available than at the start of the year.
“Each week this year there are more buyers than sellers and inventory has been falling until very recently,” he said.
Teta and Simonsen talked about four potential sources for inventory moving forward.
Newer Owners
People are staying in their homes for less time, which could mean newer owners might be more likely to list their properties than in the past.
In Q1 2023, sellers had been in their homes an average of just under 5.6 years, which is a 12-year low, Teta said.
“This trend is obviously more pronounced in some areas than others. Across the data we looked at, average tenure decreased year-over-year in 56% of all the metro areas we track, with some areas actually showing decreases in tenure of upwards of 25%, so newer owners are selling more of the homes that are out there, and choosing to sell earlier in their homeownership journey than before,” Teta said. “The main question here is, ‘Will more sellers follow the lead and put their homes on the market, or just stay on the fence?'”
Investor Properties
Simonsen said a number of big institutional investors stopped buying last year, while mid-level investors stayed and mom-and-pops have fallen off a little bit.
“Basically, none of those groups of investors have been selling yet. And I think what’s happening is they all have a really good deal. They have really cheap financing, they have a lot of equity, and if they are investors, they have good mortgage rates,” Simonsen said.
That could change, he said.
“There may be sometime when sentiment changes among investors and if they decide that they want to unload, maybe they need to free up cash, whatever the reason is, those could come to market to actually get us some inventory,” Simonsen said.
Distressed Sellers
When there is a job loss recession, people can no longer afford their mortgage payments and are forced to sell their homes, Simonsen said.
“The recession signals have been out there for over a year and so part of our expectation for 2024 was that we might start to see finally some distressed sellers in the market. We still have employment at basically record levels and so we haven’t seen any distressed sellers,” Simonsen said, adding that they expect they will in 2025.
New Builds
Teta said homebuilder permits and starts are fairly healthy.
“I think the homebuilder market on the new home side could be a source of good inventory going forward,” Teta said.
Joel Kan, vice president and deputy chief economist for the Mortgage Bankers Association, said in a recent statement that new home sales have been driving purchase activity in recent months as buyers look for options beyond the existing-home market.
New home sales jumped in May, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development.
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