Not long ago, the Washington region was suffering from an oversupply of unsold homes. That number has dropped dramatically in recent years -- too far, according to Holly Worthington.
There's a dearth of inventory in most price ranges," said Ms. Worthington, managing broker of Long & Foster's Chevy Chase and Woodley Park offices. "We would have more sales now if we had enough inventory."
The inventory of homes for sale is important to both buyers and sellers. If you are a buyer, you want a large number of homes from which to choose -- so many that they dawdle on the market until you decide which one you want. When you make an offer, a large inventory means the seller will be eager to make a deal.
That's why sellers want a smaller inventory, which encourages buyers to make deals before another buyer grabs the home they've chosen. And that's what is happening now.
"There are so many more buyers than available properties right now," Ms. Worthington said. "My agents tell me they can't find properties for many of their buyers."
The inventory of homes for sale on a given day is a result of two things: how many homes have been listed with area Realtors and how many have been sold. When listings are sold (or withdrawn from the market for other reasons) they are dropped from the active inventory.
The five-bar charts provided today show a dramatic drop in the number of listings since 2004. (Notice that the statistics cover every other year, so you can see the trend over nine years.)
The bottom chart combines data for the number of unsold homes (inventory) and sales for the past four years. You can see the biggest change over those four years has been the drop in inventory figures. Sales have been good, but the decline in home listings really drove down the inventory.
"With a bit more inventory, we would be able to satisfy the demand from the homebuyers right now," Ms. Worthington said. "But with new housing starts down as well, low inventory could be a problem for some years to come."
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