G.U. Krueger, Principal Economist of HousingEcon.com and an alliance partner to MetroIntelligence Real Estate Advisors, has also contributed an article to the July issue of Builder & Developer magazine on the question of new home inventory.
Whereas many pundits continue to focus on remaining lots in current phases, G.U. argues that the supply in the future phases of active developments will still eventually be released to the marketplace, and thus should not be ignored.
An excerpt:
...there is “inventory is tight” chatter again pointing to declining new home inventory in various markets throughout the U.S. For example, in Southern California’s Riverside County, according to Hanley Wood Market Intelligence there were just 800 units of new home inventory -- or barely eight weeks of supply at the end of April 2009.
Thus, the implication is that in eight weeks or so we are going to be whole again.
However, new home inventory is only a small part of the story. By April 2009, there were an additional 1,159 homes under construction in Riverside County, and lots earmarked for future construction numbered another 21,000 units -- a number which has been dropping but is still large. This future supply is significant because it is a type of pent-up supply which can be easily activated. Consequently, total buildable lot supply reached 25,000 units in April 2000, a 60-month supply at current sales rates -- not quite as tight as local pundits are proclaiming...
1 comment:
According to the MLS and the NAR it would appear that"residual inventory" is declining. These numbers unfortunately do not reflect the bank's shadow inventory, and are therefore not accurate in terms of supply. Also, we have rate resets on Alt A and Prime mortgages lasting until 2012! No wonder real estate pros are predicting that short sales will comprise 70% of all listings in the near future. This points to expanding ,not shrinking inventory.
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