Explaining Low Housing Inventory

FRIDAY FACTS

May 22, 2015

 WHY IS HOUSING INVENTORY SO LOW?

From an article in Inman News by Chris Trapani

 

  1. The Taxpayer Relief Act of 1997 with capital gains exclusions of $250,000 for singles and $500,000 for married couples eased the home sale tax burden for millions but in higher priced markets, froze move-up buyers because their gain exceeded the exclusion and created an unwanted tax burden. The flow of buying/selling was disrupted.
  2. The sustained low-rate environment with purchase or re-fi at tremendously low rates has reinforced staying in place.
  3. Value disruption in 2008 and 2009 caused some areas to experience a complete reset of values, sometimes up to 50%. Buyers who purchased in these marketplaces at significant discounts contribute to additional frozen inventory.
  4. Values are not at peak levels across the country. Some areas have reached or surpassed peak levels, but many have not.
  5. Hope that values will continue to climb.
  6. Stunted new development. Single family housing starts are at half normal levels.
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