Housing Inventory for First Time Home Buyers
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Two statistics we use to analyze the Twin Cities Housing Market are “Inventory of Homes for Sale” and “Monthly Supply of Inventory”. These typically help sellers determine what a realistic timeframe is for the listing and eventual selling of their home because it gives them a sense of the number of homes on the market and how long it will take for those homes to be sold.
Buyers can also use these statistics to help them determine what kind of competition they have for purchasing homes. By looking at the # of homes available in a certain price range and also what the estimated monthly supply of those homes are, buyers can see if they have a lot of homes available to purchase and how fast those properties might disappear to other buyers.
Since we’re in February 2010 I thought I’d share the latest numbers with you so you can see that in the First Time Home Buyer price range we are seeing a shortage of homes available. For our purposes we’ll stay below $150,000 since the majority of 1st time homebuyers will be buying a home in this range. We’ll also limit the numbers to single-family detached homes (which excludes townhouses and condos).
Inventory of Homes for Sale
- Feb 2009 – 4,234
- Feb 2010 – 2,869
(drop of 32%)
Monthly Supply of Inventory
- Feb 2009 – 6.2 months
- Feb 2010 – 2.95 months
(drop of 52%)
So what does all this mean? Basically the numbers of homes available for first time home-buyers is shrinking. This is happening for a couple of reasons. First Time Buyers, along with investors, are looking for cheaper properties. So the inventory is being bought up by a few different groups of people. Banks are also limiting the number of vacant foreclosed houses they allow to be put up for sale, to control the supply/demand ratio and create bidding wars when they list new properties.
After the April/June Tax Credit deadline, I personally anticipate there to be less demand for homes, which will hopefully make it a bit easier for buyers to purchase their first property in these lower price ranges. There are also statistics that suggest another wave of foreclosures may be coming in the next year or two, due to Adjustable Rate Mortgages increasing their interest rates which will make the payments too high for their home owners.
We’ll have to wait and see what happens with those. But for now, we know there are less homes available and more demand out there for first time buyers.
(All numbers are via the Minneapolis Area Association of Realtors)
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Great post Steve-
I wish the inventory was back to 2009 levels. It is so frustrating to constantly be looking at properties only to find out they have 10 offers on them or already sold.