Over the past three months, talk has been at an all-time high about housing inventory being at an all-time low. All this talk had me thinking: Are there really that many fewer homes being listed for sale than before, or are they just getting eaten up faster? Or both? For answers I went into MLSPIN. The largest Multiple Listing Service in our state by far, it handles the vast majority of our state’s sales and has statistics on the number of homes listed per year since 2000.
The findings were very interesting.
Over the 18 years that MLSPIN has been recording homes listed for sale, there has been an average of roughly 113,000 homes listed per year. We started the century with fewer homes listed for sale than in any other years, with an average of about 91,000 homes from 2000-2002. Then there was a large increase in 2003, followed by an even bigger jump in 2004-2008, when the average number of listed homes increased to nearly 141,000 homes per year. Because this is a supply-and-demand business, the market crashed; supply went up and demand went down as the economy got worse and worse. This is one of the reasons why prices nose-dived in 2008. From 2009 to 2017, an average of roughly 106,000 homes were listed for sale per year.
These numbers go to show that there are many misconceptions about the number of homes being listed. Too many people, including realtors, continue to say things like: “No one is listing their homes.’’ “Nothing is for sale.’’ “No one wants to sell.’’ As you can see from the numbers, this is simply not the case. No doubt the supply is not meeting the demand, but to say no one is listing is simply not true. The issue is that demand is up significantly, and given the strong economy, it doesn’t appear to be backing off anytime soon.
Given that our population and housing stock have grown since the turn of the century, and based on where the market is since the 2008 crash and subsequent recovery, 2018 is looking like 2002. Based on this, I see the inventory increasing at some point in the next few years. Why? As prices continue to rise and builders turn a greater profit, they will take more risks and go after more properties. In addition, Governor Charlie Baker has introduced the Housing Choice Initiative, which creates a new system of incentives and rewards for municipalities that aims to deliver sustainable housing growth, establishes a technical assistance “toolbox’’ to empower cities and towns to plan for new housing production, and proposes legislative changes “to deliver smart, effective zoning at the local level.’’ If new construction can increase amid less red tape from cities and towns, it will add to the inventory and eventually begin to satisfy the increasing demand that has been the main issue over the past few years.
As more homes are listed and inventory increases, sales will pick up just like they did from 2004-2006. The market needs this to happen, but like everything else, it takes time. One thing I have learned about the real estate business since I started in 2004 is that every time we get used to a market, it changes. So have no fear, the market won’t stay like this forever.