Inventory reduction is currently one of the biggest stories in the housing market. In most U.S. cities, real estate listing volume has dropped over the last year. In some cases, considerably. There are fewer homes for sale and more buyers competing for them. But this is starting to change. In some local housing markets, inventory is actually growing.
Each month, Realtor.com publishes a housing summary with data for 146 of the largest metro areas in the country. Among other things, they report the total number of real estate listings in each housing market, and how that number has changed both monthly and annually. This gives us some insight into which markets are contracting, in terms of listing volume, and which ones are expanding.
Fastest-Growing Housing Markets
We sorted the data to find out which housing markets have had the biggest increases in listing volume, over the last year. Here are ten cities where housing inventory has grown the most, based on Realtor.com’s data:
1. Riverside-San Bernardino, CA (+26.04%)
It’s surprising to see California cities on this list. This time last year, most of California’s metro-area housing markets were on the other end of the spectrum, with significant inventory reduction. Clearly, the trend is reversing. It will be interesting to see how this affects home prices, which have been rising rapidly in these hot markets.
The Riverside-San Bernardino metropolitan area (also known as the Inland Empire), lies due east of the Los Angeles metro area. The number of homes listed for sale in this area rose by more than 26% in the last year, according to Realtor.com.
Out of the 146 metro areas tracked by Realtor.com, the combined Riverside and San Bernardino real estate market had the largest year-over-year increase in inventory. It’s bad news for sellers, but good news for anyone planning to buy a home in this area.
2. Dayton-Springfield, OH (+23.49%)
Demand is growing in the Dayton real estate market. According to a recent report by the Ohio Association of Realtors, home sales in July were 20% higher than the same month last year.
What’s different here is that the housing inventory in Dayton has actually risen to meet the demand. Real estate listings in the Dayton metro area are up by 23.49%, year over year.
3. Atlanta, GA (+17.85%)
Much can be said about the Atlanta real estate market. It’s a tale of extremes. Atlanta was one of the last metro-level housing markets to hit bottom, in terms of home prices. House values in Atlanta were still falling at a time when the rest of the country was hitting bottom.
Today, Atlanta’s housing market is rapidly rebounding. By spring of 2013, it was outpacing most of the nation in terms of home price increases. According to the S&P/Case-Shiller Index, Atlanta home prices climbed 20.1% from May 2012 to May 2013 (the most recent data available at the time of publication).
But a rising tide of inventory could slow the gains in this housing market. In July, the number of homes for sale was nearly 18% higher than the same month in 2012. This could put downward pressure on house prices, unless we see an equal or greater rise in demand.
4. Sacramento, CA (+16.66%)
Ten months ago, I was writing about the huge inventory reduction taking place in Sacramento. At that time, listings were down by a whopping 60% in California’s capital city. For months, this has been one of the hottest housing markets in the country. But the tide may be turning.
Today, home prices in Sacramento are cooling, according to a recent report from Trulia’s chief economist. Inventory shift is once more playing a lead role. The number of real estate listings has risen by nearly 17% over the last year. So in less 12 months, Sacramento’s real estate market went from a 60% reduction in inventory (year-over-year) to a 16.66% increase in listings. Talk about a turnaround.
Sacramento’s real estate market may be cooling. But it’s still pretty darn hot when compared to the rest of the country. The median asking price has risen by nearly 32% in the last 12 months. The median sale price is up by 37% year over year, according to Zillow.
5. Santa Fe, NM (+14.02%)
Santa Fe is a much smaller housing market, compared to the others on this list. So it’s harder to identify meaningful trends. But here again, rising inventory seems to be putting downward pressure on home prices. The total number of homes listed for sale in Santa Fe rose by more than 14% in the last year.
The supply-and-demand shift is starting to have an effect on home prices. As the Santa Fe New Mexican recently reported: “the overall average sales price year to date is down. This time last year we had an average sales price of $385,000 while it is presently at $379,000.”
Rounding out the top-ten list for inventory reduction, we have the following real estate markets:
- #6 – Shreveport-Bossier City, LA +13.23%
- #7 – Punta Gorda, FL +13.00%
- #8 – Ventura, CA +11.38%
- #9 – Albuquerque, NM +9.83%
- #10 – Stockton-Lodi, CA +9.49%
We expect to see similar trends in many local housing markets over the coming months, albeit to a lesser degree. It could slow price growth in many U.S. cities, as we move into 2014.