Each month, the Kansas City Regional Association of Realtors releases the monthly metrics for all housing activity in those counties covered in our local MLS database…and each month they reflect the change in housing inventory from the current month to same month last year. That number is always relevant because we want to see if we have more homes on the market, less, or no change. Why? Inventory is, as you may well guess, a major factor in home values and is THE contributor to the massive appreciation of homes in the past years.
Since October of 2014, we have had double-digit decreases in inventory (month-after-month) when compared to the previous years. For many months, we were seeing over 30% decreases. So where we might have had 5000 homes sold in a given month, we dropped to 3500. We have had 41 consecutive months of double-digit decreases…until this past May where we dropped under 10%….then June where we dropped to 6.7%.
For people who watch this carefully, this is a “hmmm” moment. Some might think, “well this is summer and more homes are on the market in the summer”. Remember, we have been losing ground on inventory for years now and all those years had summers too. Another argument could be new build inventory starting to finally catch up statistically. (See the permit report from the Home Builders Association of Greater KC) No doubt, new construction has had a month-over-month increases for some time now, but residential resale (on its own) went under 10% inventory reduction in June.
OK, so what does this mean and why does this matter anyway? Two months hardly makes a trend, but when buyers are being squeezed out of the market due to rapidly increasing home price valuations, this is a bright spot for them. I’ve said many times before, market extremes are not good for anyone and that certainly includes the housing market. We would like for qualified buyers to find enough homes to get into and for sellers to have a healthy buyer pool simultaneously. What I’m describing is a neutral market that favors neither the buyer or the seller.
We are a long way from a neutral market, but benchmarks that I’ve just described get my attention. I’ll be watching carefully to see if this trend continues and you better believe I will have a post when we have our first positive change in monthly inventory.
Thanks so much,
Terry Jackson | Realtor at Domicile One Realty | 913-488-5623 | www.DomicileOne.com