Housing inventory takes on new significance
Published 1:35 pm Tuesday, December 6, 2022
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The Tri-Cities housing market is in an anxious state of equilibrium as it trudges through the last two months of the year. Mortgage rates have doubled with the federal reserve’s inflation-fighting efforts, adding hundreds of dollars to the average monthly mortgage. That took a bite out of affordability and tapped the brakes on demand. But it’s the only monthly metric playing nice with inflation control.
Prices have gone flat. But they haven’t declined because the slight increases in inventory have done more to goose motivated buyers off the sidelines than normalizing the number of homes on the market. Active inventory has increased for the last seven months. Still, the number of homes for sale across the region is down by a little more than half of what it was before the pandemic. It would only take 1.7 months to sell everything on the market at October’s sales pace.
Of course, this is not the time of the year when there is a lot of inventory activity. That comes with the first of the new year.
Some housing pundits think an inventory spike early next year is inevitable. They’re probably right about the major metro market where they focus. Things in smaller rural metro markets like the Tri-Cities region are different.
How many owners are willing to sell into a still-hot market with limited inventory choices is a hanging question. There’s still ample organic and new resident demand and a push by builders to increase inventory. But continued supply chain, materials costs, and a stubborn labor shortage are pushing back what builders would like to do. There’s also growing pushback from locals who are uneasy about the changes they fear via the growth they’re seeing.
Given current conditions, active inventory will increase early next year. But it’s not likely to be much of a spike when considering that it would have to more than double to reach pre-pandemic levels. The last time the region had balanced market conditions on the inventory front was the first quarter of 2018.
