Expensive Home Inventory Soars

The supply of homes for the rich rose rapidly in October. The same cannot be said for the inventory of low and mid-priced homes. Perhaps the top 1%, 5% or 10% are more likely to buy and sell. At the lower end of the market, the next decade include more people who rent.

According to real estate research firm Zillow:

The inventory of for-sale homes in the bottom home-price tier rose year-over-year in 68.3 percent of the 353 total metro areas analyzed by Zillow, while inventory in the top home price tier rose in 82.2 percent, or 290 of the 353 markets analyzed. Inventory of all homes for sale nationwide increased by 15.8 percent year-over-year.

Even with the disparity, home sales are relatively strong, although the strength has started to wane slightly:

In 25 of the 35 largest metros analyzed, there were more homes for sale this October than last October in all three price tiers. In 14 of those metros, the increase in number of homes for sale was in the double digits in all price tiers.

There has been a perception for some time that the home market in the future could look very different that it has been for most periods since World War II.

The Zillow information would support that younger people have started to rent rather than buy:

“Depending on their finances, it’s likely that individual buyers in the same market might be having completely different home buying experiences. Even as conditions improve for buyers overall, it remains a tough row to hoe for first-time buyers and lower-income buyers, especially compared to their more well-off contemporaries,” said Zillow Chief Economist Dr. Stan Humphries. “We expect more demand to come from the lower end of the market in coming years as millennials overtake Generation X as the largest home-buying demographic. As this happens, builders will be forced to build for these more entry-level buyers, and inventory at the bottom tier should improve, however slowly.”

That is, if Generation X ever decides to use its mostly modest income to own homes at all.

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Methodology: The Zillow Home Value Index is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars and seasonally adjusted.