Relative Supply Of Homes Is Falling

The relative supply of homes is lower now than it has been in quite some time, and the real supply of homes continues to decline to levels not seen in the past 5 years. The falling supply of homes has unfortunately been matched by falling demand, creating a situation where the months of supply continues to be near 12 months.

Tallahassee Real Estate Supply And Demand

The problem in the market has many fronts, but the largest problem is not what many have been writing about in the large US newspapers.

Most are blaming a tightened money supply and tougher lending standards, but that is only adding fuel to the fire of the real problem in the housing market. When we look back at the tax credit, all the government stimulus did was motivate “future” first time homebuyers to enter the market to receive $8,000 towards the purchase of a home.

These “future” first time homebuyers of yesterday are the “present” first time homebuyers of today. That means our current market must rely on current homeowners to account for an even higher percentage of the home sales in the “present.”

Despite reports from NAR blaming tightened lending standards, the real problem with housing is home buyers who first must sell a home. Sellers have no equity and many are upside down in their homes, unable to first make the sale that will let them be buyers.

Our current buyers have no ability to sell first, so we sit and wait for the growth to move the market. Pay close attention to population growth, new household formations, and JOBS! These are the fuel for the future of our housing market.

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