Inventory, how low can it go?
If I was trying to come up with one, single compelling reason to point to as the driving force behind this longest running, highest flying “up” cycle we’ve been on since March of 2013 (when all of a sudden, it felt like the market had been shot out of a cannon!) I’d have to go with “low inventory”.
Call it lack of supply, paucity of listings, insufficient quantity of properties, scant number of available homes, or simply low inventory it all sounds like the same broken record by now. And that’s exactly what has happened on the supply side of the equation for ten years now – we’ve broken records and set a series of historic new lows for the fewest number of homes on the market.
Here are a few data points to demonstrate the great shrinking effect that has reshaped the market: Going back to 2010, as we were recovering from the ravages of the Great Recession, the high point in the active supply of homes was 1,136 and the low was 723. In 2013 there was a peak of 612 listings on the market and a low of 405. In 2017 the high was 475 and the low was 231. In 2021, the high tumbled all the way to 274 while the low fell to an infinitesimal 95 homes!
Looking ahead into 2022, it appears that the supply chain crisis affecting real estate is going to continue. We began January at another all-time nadir, with a staggering low of 75 single family homes (sfr) available for frustrated buyers to choose from. Adding insult to energy, almost a third of those were listed in the “coming soon” category and not available to be shown. So let’s round our current active inventory off to approximately 50 listings countywide!
Fed-up buyers suffering from market fatigue are weighing their limited choices: double down on their search, hoping against hope that they’ll find something and prevail in the competition against all the other buyers just like them or just quit looking altogether and risk getting priced completely out of in another few years (absent a winning lottery ticket or a significant equity event at a new startup.)
Right now, buyers diligent about scheduling can see every single home that’s available in Santa Cruz in two days. That’s the entire inventory running the gamut from mountain cabins for $500k to oceanfront estates for $5million Chances are that if you have an actual price range and a general location in mind, there are probably fewer than three listings to look at, spanning the gaps between the good, bad and ugly.
Next Week: Honey, I shrunk the inventory: How the market ran out of listings.