The Three Main Sources of Housing Inventory: A Dive into Market Dynamics

Today, I want to share some key insights into the housing inventory crisis, a topic I recently explored in a video. Click to watch my video

We’ll dive into the three main sources of housing inventory and what this means for the market in 2024.

Understanding the Three Sources of Housing Inventory: Did you know that our housing supply primarily comes from just three sources? These are new construction, resale, and foreclosures. Unfortunately, for over a decade, new construction hasn’t kept up with our growing population, leading to a significant housing deficit.

• New Construction Lagging Behind: The rate of new construction has been insufficient to meet the rising demand due to population growth. This shortfall in new homes has been a key contributor to the overall scarcity of available housing.
• Low Foreclosure Rates: Currently, the number of foreclosures is significantly low, especially compared to the levels seen during the pandemic and the financial crisis years of 2008-2012. This decrease means that foreclosures aren’t contributing much to the overall housing inventory.
• Resale as the Primary Source: With new construction lagging and foreclosures at a low, most of our housing inventory comes from resale. However, many homeowners are reluctant to sell, largely due to holding onto mortgages with favorable interest rates. A recent Zillow survey highlighted that 80% of mortgage holders enjoy rates below 5%.

The 2024 Outlook: I anticipate a change in the housing inventory by 2024, primarily driven by the reducing ‘loss gap.’ This term refers to the cost difference between current low-rate mortgages and potentially higher rates if homeowners were to sell and buy anew.

In strong markets, the opportunity to gain more equity when selling can offset this loss gap. As mortgage rates begin to fall, I foresee an upcoming surge in both listings and sales. This shift is good news for both buyers and sellers in Snohomish County.

Conclusion: If you’re planning to buy or sell in Snohomish County, the upcoming year looks promising. I’m here to assist you in navigating these changes, whether you’re in the market to find your dream home or looking to sell your property. For more detailed insights into this topic, I invite you to watch my recent video, where I delve deeper into these trends and their implications for our local real estate market.