In industry report by Trulia has found that the number one reason home inventory on Oahu is low is due to the lack of inventory. This fact highlights why becomes increasingly important to find a Realtor working to ensure they utilize all of their resources to find you exactly what you need and make the deal quickly work in your favor.
Read the full report from Pacific Business News, below:
The low number of single-family homes and condominiums for sale has helped keep Oahu’s housing market hot this summer, but a new report by Trulia found the main influence on housing inventory may not be what most real estate experts think.
Trulia reports there are five theories as to why there are so few homes on the market — investors are holding homes as rentals, high prices have made buying unaffordable, owners are reluctant to sell if they can’t buy another home, baby-boomer homeowners can’t or don’t want to move and owners looking to trade up can’t find a home they can afford.
But the No. 1 impact on inventory: Homebuilding, and not enough of it.
Trulia says that every one percentage point increase in housing stock in a market between 2010 and 2016 correlated to a 13 percent increase in inventory.
Trulia also found that investor ownership correlates with lower inventory, with every one percentage point of housing stock owned by investors driving inventory down by 2.8 percent.
According to Trulia’s data, 46 percent of homes in Honolulu are owned by investors, the eighth-highest percentage among the cities in the study. That figure was higher than 53 percent in New York, Los Angeles and San Francisco.
Here on Oahu, the latest report by the Honolulu Board of Realtors found there was 2.7 months of remaining inventory for single-family homes and 2.8 months of remaining inventory for condos, meaning that if no more listings came on the market, the homes would sell out in that amount of time. Those numbers have been less than three months for nearly a year.
Economist Paul Brewbaker of TZ Economics has been saying for years that developers are not building enough new homes to keep up with demand.
He told Pacific Business News earlier this month that the supply of housing “is as constrained as ever” but also questioned whether the demand was as strong as commonly thought, since prices have not risen as high as they should in such a tight market.
Other common reasons often given for constrained inventory don’t correlate as much to actual low inventory, Trulia found.
For example, the share of homeowners in a market who are age 55 or older has some effect on inventory, but not nearly as much as adding new homes to the existing housing stock. For every one percentage point increase in the share of homeowners 55 and over, inventory increases 3.4 percent.
Honolulu’s share of baby boomer owners — 57.4 percent.
The price spread between a homeowner’s current home and the trade-up home has a negligible effect on inventory. For every one percentage point increase in the price spread, there is only a 0.2 percent increase in inventory.