By DON FENLEY
Want to keep your fingers on two metrics that show where inventory is headed?
A daily Multiple Listing service check does the trick. But it is monotonous. And since inventory is dynamic, it constantly changes. Here’s a market watcher tactic. Track the dance between the pending sales and new listings. There are other players, but these two set a telling market tempo.
Sellers can increase new listings. But if buyers snap them up as fast as they go public active inventory stays in a rut. And the local inventory has been in a rut for going on five years.
During the last two years, the new listings-pending sales dance stagnated inventory growth. The result was active inventory eroded way below the balanced market conditions benchmark of five to six months. That means buyers were under pressure to act quicker than normal, give up things like home inspections and pony up more money to get the deal done.
Agents who have been around for a while can remember when it was normal to have 10 to 11 months of active inventory every month. But that was then and now is now. In January, the region had 1.7 months of inventory and it’s hasn’t moved much since September last year.
How does that compare with pre-pandemic conditions?
January’s active inventory was 63.4% less than what it was in January 2018. That’s the last year the region had balanced market conditions.
Drill down to the city and community submarkets and there are examples of inventory levels still choked by demand and supply imbalance.
But things are changing. They’re changing because one sure way to increase inventory is to see fewer sales and the Tri-Cities area has seen that since July last year. But that hasn’t been strong enough to totally drag inventory out of its rut.
Builders are busy – they’ll get busier when it stops raining. But the two largest local builders – D.K. Horton and Orth Homes – only have about a month’s inventory on the ground. It’s helpful, but not a quick solution.
Inventory and affordability will walk hand-in-hand into this year’s prime home buying and selling season.