Why Today’s Housing Inventory Proves the Market Isn’t Headed for a Crash
- Current Homeowners Putting Their Homes Up for Sale
Even though housing supply is increasing this year, there’s still a limited number of existing homes available. So, what does this mean? Inventory is still historically low. There simply aren’t enough homes on the market to cause prices to crash. There would need to be a flood of people getting ready to sell their houses in order to tip the scales toward a buyers’ market. And that level of activity simply isn’t there.
- Newly Built Homes Coming onto the Market
Home builders are actually slowing down their production right now. To avoid repeating the overbuilding that happened leading up to the housing crisis, builders are reacting to higher mortgage rates and softening buyer demand by slowing down their work. It’s a sign they’re being intentional about not overbuilding homes like they did in the bubble.
- Distressed Properties (Short Sales or Foreclosures)
The last place inventory can come from is distressed properties, including short sales and foreclosures. Back in the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to secure a home loan they couldn’t truly afford. Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures.
That’s why inventory tells us the housing market won’t crash.
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