The operative variable in our four-year housing recovery has been record-low inventory. There are many underlying reasons why inventory is low, but generally speaking, many people have had to hold on to their homes because their mortgage was underwater or they hadn’t built enough equity to trade up.
As home values have continued to grow, each passing month has given people more equity in their homes. More equity equals more flexibility to move or trade up. And that’s good news for housing inventory.
Let’s look at year-over-year inventory changes to see the housing recovery in full scope. The US housing recovery began in earnest in January of 2011 as the bulk of the foreclosure pig had worked its way through the python and we’d had the initial signs of economic growth. People were still way under water, though, and many of them were trapped, even if they never defaulted on their mortgage.
Over the past year, we’ve begun to see slight inventory growth.
Note that we’re not seeing an inventory spike, nor any other catalyst for panic; just a little inventory growth that gives all participants more flexibility. In addition, we’ve seen no signals yet of demand abating, though we try to be vigilant for signals there, as demand measures are the strongest indicators of future pricing changes.
Nonetheless, small signs of hope for eager buyers.