The US housing market is now encountering a new problem, as after years of oversupply in the market now has a dearth of attractive properties for sale.
At the end of September there were just over 2.19 million homes for sale, according to Realtor.com, which is a reduction of 20% on September 2010, and although on the face of it are falling inventory should be a good thing as it increases competition for suitable homes, the reality is slightly different.
Estate agents are finding people are pulling their homes off the market and are choosing to wait until prices recover. There are fewer foreclosures for sale as banks have been dragging their feet against foreclosing on properties ever since the controversy over irregularities surfaced last autumn, but demand remains soft and there is still a shadow supply of distressed property which is estimated at around 1 million.
These homes will gradually come onto the market over the next few years further constraining price gains. The decline in the number of properties the sale also means that less deals are being struck between buyers and sellers as buyers are cautious about paying too much while sellers feel they may be underpricing their homes.
In September housing inventory is for Miami were down 49% compared to a year ago, while in Phoenix this figure was 48%. Tampa, Florida has seen a reduction of 33% and Atlanta has seen a fall of 30%, while in Detroit this figure is 28%. While some homeowners are still looking for their dream home, others have given up completely, and property experts think this shortage of attractive, well priced homes is affecting sales more than sluggish demand.
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