Low Housing Inventory | Jersey Mortgage Company

Low Housing Inventory

Low Housing Inventory:

A Logical Explanation

Low Housing Inventory:

A Logical Explanation


The real estate market has faced a unique set of circumstances from 2012 to today, all leading to a dramatic decrease in overall housing inventory. But what’s causing the massive shortage?

Let’s take a look at the key factors driving this nationwide real estate trend.

The increase in housing costs and the equity built in inexpensive starter homes purchased years ago leaves would-be buyers at a loss. Instead of moving up, they’re battening down the hatches and staying put in what was meant to be their starter home.

Starter home buyers are unable to move up the next tier, and their homes are locked up and are not re-entering the market. That means, young buyers who would be purchasing starter homes continue to rent because there’s no inventory in their price range to invest in.

A lot of buyers are still recovering from the financial losses they faced when the market bottomed out. That means there’s another subset of homes that won’t be hitting the market anytime soon. What can be done to solve the issue? The key to fixing the issue is to address the widening price gap between mid-level starter homes and next-level-up homes. In 2016, the median list price of a premium home across the nation is $542,805. To contrast, the average price of a mid-level starter home is only $267,845. Unless that gap becomes smaller, starter home buyers are going to continue to struggle to move into a nicer property.




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