Things may not be looking up for homebuyers this year, with the months of inventory and total inventory of homes on the market in Southwest Washington at the lowest it’s ever been in a January.
An increase from December to January is normal, but not usually an increase of just a tenth of a month, said Terry Wollam, a broker at Wollam and Associates.
“I would have hoped it had been higher,” said Wollam. “To me, that doesn’t bode well.”
The trend isn’t just local, said Wollam. It’s a national one. However, the region is outpacing the national trend.
“We tend to see greater price appreciation and greater demand, and that means our inventory levels are even lower most likely than other areas are,” said Wollam.
Wollam did note that it seems impossible to have less inventory in months than the area has now.
“It’s hard to get accurate statistics of sales activity when you don’t have enough sales activity to know what your sales activity would be,” Wollam said.
The region’s housing inventory is calculated based on how long it would take to sell all homes listed for sale. Since October 2020, that time has been less than one month.
There were small hikes in housing inventory in January 2021 and in the late summer and early fall. Generally, however, the inventory has hovered around two weeks. This January was no different. There’s still only slightly more than two weeks of inventory available to buy in Southwest Washington.
There were 695 new listings in January, which is up from 506 homes listed for sale in December, according to the latest real estate report from the Regional Multiple Listing Service. The increase brings needed inventory for a housing market that is stretched thin. The number of new homes listed in January, however, was still lower than the number of homes listed for sale in January 2021, which was already very low.
There were 208 readily purchased and occupied homes for sale in Southwest Washington, on the day the RMLS report was run on the last day of January. There were another 75 homes under construction and 57 homes planned but not yet being built.
Wollam expects the housing supply situation for new construction homes to be worse this year than it has been in other years.
New homes have historically comprised a larger portion of the region’s available housing supply. But that sector has been struggling.
Home construction has faced numerous supply shortages from garage doors to windows to heat pumps. Supply prices have fluctuated; the price for lumber jumped again in January. On top of all that, there’s been a shortage of workers, as has been the case in so many industries.
The number of homes pending sale in January increased from the 578 home-sale offers that were accepted in December to 701 in January. Again, that increase was still less than the 838 offers accepted in January of last year.
The median price for homes in the region grew from $425,000 in January 2021 to $500,000 in January 2022.
“Statistically, things are kind of fixed,” said Wollam. “We can’t provide more homes than what we have to purchase. And there’s not an inventory coming up, unfortunately, to exceed the demand to help build up inventory.”
If things improve around the pandemic’s effects, Wollam thinks it could aid in the home industry — that is, if labor shortages are relaxed, coronavirus impacts are eased and the supply chain is fixed.
“That should help to some extent,” said Wollam.
However, those aren’t the only problems facing the industry. The region is running out of buildable land.
“We still have a lot shortage and that is the one that I don’t see improving, unfortunately,” said Wollam.
“If you want to go with supply and demand and you want to limit the appreciation of homes so more people can afford homes, the only way to do that is to increase supply. And the only way to increase supply is to make land development more attainable. That’s gotten more difficult year over year.”