As I commented in my monthly market report earlier this week, inventory has declined significantly (15%) over the past year!



Why is inventory dropping so much???

I have a theory....

First and foremost, I believe there are quite a few homeowners who are deciding to lease their properties instead of selling them, after having had little success in the sales arena.  I have seen this quite frequently over the past 6 months, and it makes sense --- leasing the property can provide a stream of income with which to pay the mortgage payment.  Leasing a property also gets the homeowner down the road a bit (perhaps a year or two) after which they can try to sell again in a market this has hopefully improved.

Second, I believe some sellers are either pulling their property off the market, or never putting them on the market, because they don't believe they can sell their home right now for a price that would either: a) make them happy, b) payoff their mortgage, or c) allow them to move into their next home.

Finally, after six years of steady increases in foreclosures in our local market, that trend finally reversed itself in 2011.  There were 17% fewer foreclosures in 2011 as compared to 2010 -- which means there are fewer bank owned homes coming on the market.

We'll have to wait a few months to see, but I think it's quite possible we'll continue to see much lower inventory levels than we saw last year.