Empty Homes, Inventory Continue to Dominate Markets
If there is one constant across the country when it comes to the real estate market, it is high housing inventory. Existing inventory remains sky-high all over the nation because of low prices and stifled demand – brought about in part because of tough lending requirements from banks who were burned deeply by the housing crisis.
Another major reason, according to data released today, is the high unemployment rate. Of course, we’ve known for a long time that high unemployment has a direct impact on housing vacancies and home inventory because fewer people who have jobs result, ultimately, in fewer homes being purchased.
And it results in more homes being foreclosed. That is where most of the home inventory today comes from.
So, where are home inventories still stacked to the ceiling? The national vacancy rate is 2.6% for the first quarter of 2011 for homeowners (and 9.6% for rentals), with the leader, surprisingly, being Idaho, with 4.4%. Florida is next with 3.8%, followed by Maryland (3.8%) and Tennessee (3.6%). The District of Columbia had the lowest rate, at 1.1%, followed by Alaska (1.3%), Wyoming (1.3%), and South Dakota (1.3%).
High housing inventory has a negative effect on prices, because with all the surplus of supply, prices fall according to basic laws of supply and demand. Prices still haven’t bottomed in many parts of the country and may not for some time. Of course, for the investor or prospective homebuyer looking to lock in profit and capture incredible deals, this is good news.
Areas that have high inventories should be targets for investing or home purchasing. These are where the best deals will be found, because banks will likely have a surplus of foreclosures and REOs on their hands and will want to unload them if at all possible. Buy low, sell high, and bank a profit.