Newly released statistics show housing inventory dropping to a 4 year low in October. So does this mean real estate investing is about to run out of steam due to a lack of deals or does it promise faster flips and rocketing home values?
Anyway you look at it lower home inventory levels ought to be a great thing for real estate investing when you consider the large number of foreclosures on the market were being blamed for not just holding back a housing rebound but the economy as a whole.
According to Realtor.com and a compilation of MLS data the number of homes listed for sale dropped 3.5% between September and October. Though even more impressive, this number is down 21% since the same time last year. Perhaps among the first numbers backing up a nationwide real estate recovery.
Some of the cities seeing the largest declines in inventory include:
To see just how impressive this drop is it is important for real estate investing companies to look at the number of months of inventory available in any given local market, keeping in mind that 6 months represents a normally healthy market. According to an article in the Wall Street Journal Las Vegas currently only has 4.3 months worth of housing inventory, while Sacramento has just 2.5 months.
Of course there are many factors to consider when analyzing acquisitions for real estate investing but a drop for the recently absurdly high inventory levels is good news for home values and speeding up the house flipping process. Some may be beginning to warn of a second bubble due to how hot the demand for real estate is in some areas, but this will surely be tempered by new foreclosures steadily coming available over the next few years. However, real estate investing pros will be smart to have all their ducks in a row and be ready to move instantaneously when they see good deals in order to avoid bidding wars.