There’s a significant phenomenon underway in U.S. real estate that’s not getting the attention it deserves: The number of homes listed for sale across the country is plummeting while simultaneously the prices sellers are asking for active listings are up in many markets – sometimes way up.
Total home listings nationwide were down 20.1 percent year over year through April, according to a new survey by Realtor.com, which has access to listing trend information through hundreds of Multiple Listing Services (MLSs). Total active listings are now 1.88 million units, 61 percent below the cyclical peak of 3.1 million homes reached in September of 2007.
Listings in some bellwether metropolitan areas are down so sharply that realty brokers complain that they simply don’t have enough houses to sell. In Seattle, for instance, listings are 42.7 percent below what they were just 12 months earlier. In Phoenix, this year’s listings are nearly 45 percent below year-ago levels. In the Tampa Bay area, the decline is 40 percent. San Francisco 38.9 percent. San Diego 32.3 percent. Markets like Riverside, Calif. (-37.4 percent), Miami (-34 percent) and Bakersfield, Calif. (48.6 percent) – where the housing bust left some of the deepest holes anywhere in the country – now have sharply reduced inventories of listings for sale.
At the same time median prices of listings are hopping. In Phoenix, the listings squeeze has helped push up asking prices by 32.6 percent over the past year. In Miami, they’re up 15.5 percent, Naples, Fla. 11.5 percent, Tampa Bay 11 percent and Los Angeles 6.9 percent. Even Detroit, where a regional depression and auto industry bust complicated a difficult housing situation over the past decade, median list prices finally are on the upswing again – by 6.6 percent.
What’s going on here? Clearly part of the explanation is that the classic free-market economic formula is taking hold: Cut supply but keep demand steady or increase it, and you almost inevitably end up with higher prices demanded by sellers.
Another possibility: Some owners are not convinced the raging buyers market of the bust era is fully over, so they are holding units off the market. Still a third reason may be the “shadow inventory” of foreclosed homes that lenders are keeping off the market for similar reasons. Some banks feel they’ll get a better price later in the year or in 2013, so they aren’t listing their holdings. Meanwhile, owners who do list their homes look around at the shrinking competition and figure: Why not ask more? After all, I’m selling what appears to be a diminishing commodity.
It’s important to point out, of course, that while the declining listings-rising prices pattern is establishing itself in every region of the country, there are notable local exceptions. The metropolitan Philadelphia area, for one, has seen a 5 percent increase in its listings in the last year plus a 1.4 percent drop in median list prices. Chicago has 19.4 percent fewer listings today than a year ago, but its median list price is down 2.5 percent. Other areas facing manufacturing employment declines and other economic challenges have not seen price jumps on listings: Syracuse is down 2.9 percent, Toledo 1.8 percent, and Reading, Pa. by 5.4 percent.
Bottom line: Though it’s uneven, the overall pattern looks positive for housing. But sellers need to take notice of the pricing changes and wake up to the fact that this is no longer strictly a buyer’s market.
Ken Harney writes a nationally syndicated column on housing and mortgage issues, the Nation’s Housing, and has won numerous “Best Column – All Media” awards from the National Association of Real Estate Editors, along with the Consumer Federation of America’s prestigious “Media Service Award,” for lifetime contributions to consumer interests in housing. He served a three year term on the Federal Reserve Board’s Consumer Advisory Council and is the author of two books on real estate and mortgage finance.
