- The Washington Times - Friday, March 28, 2008

Surely you’ve heard that homes aren’t selling very well. The drop in home sales is caused by factors that include tighter lending standards, lower consumer confidence and a cooler economy.

These things have caused buyer demand to drop off since the fall of 2005. Last year’s sales were the lowest in a decade.

The other factor in the equation is supply. When folks aren’t buying homes as they once did, the supply of available homes usually rises. This makes it harder for sellers to compete.

The adjacent fever chart shows just how much the inventory of existing homes for sale has risen recently.

  • Click here to see this week’s chart.

  • Compounding sellers’ woes are some other sources of housing inventory, including foreclosed homes and rental properties. These put more drag on the housing market by providing other options for those who seek housing.

    Many home seekers are unable to buy because many “creative financing” options have disappeared. Others who can get financing are choosing not to buy.

    Some are hoping home prices will fall further. Others aren’t sure they’ll be in a home long enough to justify buying. Still others are finding that it can be cheaper to rent than to buy.

    There are plenty of rentals out there, too. Looking at the adjacent chart of rental listings, you’ll see that the number of homes listed for rent with area Realtors has nearly doubled since 2003.

    The number of rental vacancies also has risen, as has the number of homeowner vacancies. Some homeowner vacancies are homes that are under foreclosure.

    Once a bank forecloses on a home, it needs to be sold. Sometimes a bank will list the home with a Realtor, which means it shows up in the resale listings data.

    Other times, a bank will try to sell the home itself or will contract with an auctioneer to unload it. Data on bank-owned properties isn’t easy to nail down, but the recent rise in foreclosures means even more of them are out there.

    That’s yet another source of housing inventory that will have to be pared down before the region’s housing market perks up again.

    Chris Sicks

    Contact Chris Sicks by e-mail (csicks@gmail.com).

    The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.

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