Published by Realtor Mag | JULY 2012 | BY LAWRENCE YUN
The inventory of homes for sale peaked at 4.5 million units in 2007, fueling the big drop in home prices that we’ve seen. Today, we have the opposite problem: Only 2.49 million homes are for sale, even though demand has risen some 10 percent from a year earlier.
At the same time, the shadow inventory of distressed homes is no longer the threat that it was. While seriously delinquent mortgages remain high, at 7 percent, their share of the market is down from a peak of 10 percent in 2009. That suggests inventory will further decline—unless home builders start building again. But most builders can’t do that because lenders are making few construction loans. Housing starts have been running at a 700,000 annualized pace since the beginning of the year, less than half the average rate over the last 50 years.