Only housing demand weakness can create balance. January 12, 2022, 5:43 pm By Logan Mohtashami
Early in 2021, when I was talking about how people should worry about home prices overheating, I had a glimmer of hope that maybe toward the end of 2021 we would be spared another seasonal collapse of inventory. Inventory always falls in the fall and winter, but I hoped it wouldn’t be a repeat of 2020.
Unfortunately, that didn’t happen and recent data shows that we are at fresh new all-time lows in housing inventory, with mortgage rates and the unemployment rate both under 4% currently.
Houston, we have a problem.
I have always been mindful that the years 2020-2024 have the potential for unhealthy home-price growth, but now that we are entering year three of this unique five-year period, it’s time to see when mother economics will give us clues about when this madness with meager inventory will end. We are in the middle of January 2022 and spring selling season isn’t too far away. I don’t believe any of us want 2023 to start off with new fresh all-time lows in inventory.
Mortgage demand needs to slow down
A big theme of my work here at HousingWire has been to show you that since 2014 purchase application data has been rising just as total inventory has been slowly moving lower. Demand is growing and stable, excluding the COVID-19 pause. Unfortunately, we need to see weakness in demand for inventory to rise and get into a range that I am 100% rooting for, between 1.52- 1.93 million. This level, while historically still low, will mean the days on market will go higher, and this will give people choices.
Here are two charts from the National Association of Realtors that will show that homes simply come off the market too fast to give housing a breather.
Continue Reading at: https://www.housingwire.com/articles/housing-inventory-crisis-continues-in-2022/