Very Little Housing Inventory Frustrates Millennials
The current housing market has extremely low inventory. First time home buyers typically make up approximately 40% of the market for homes. That number has now slipped to less than 35% as people in their mid-twenties to mid-thirties to have trouble finding an affordable home. After years of a sluggish economy, indicators are starting to turn around. Jobs are being created and incomes are increasing, causing many San Diego millennials to venture into the local housing market, only to find little availability.
The number of 25 to 34 year olds in the labor force is the largest in 8 years and their incomes have recently spiked upward. Millennials are finally starting families at an increasing rate. New household creation is expected to surpass 1.5 million units per year over the next 5 years, up from only 900,000 units created annually over the last 5 years. Millennials are ready to buy now and in big numbers, but just when inventory has dried up. The National Association of Realtors just reported that nationwide, listing volume has decreased for 20 consecutive months.
Many housing cycles in San Diego have typically generated approximately three to four months of inventory on the market. Other, more robust markets, typically have 5 to 6 months of inventory on the market. When months of inventory decreased below two months last year in San Diego, many buyers-agents got nervous as it resulted in less choice and a longer search process for their active buyers.
However, in early 2017, months of inventory in parts of San Diego, decreased below one month, resulting in extremely slim-pickings among buyers. San Diego has one of the lowest inventories of housing available in the nation. Part of the problem has been a lack of meaningful new construction housing-starts both in San Diego and nationwide. When first-time buyers have trouble entering the market, other segments of the market may freeze such as buyers wanting to move up to a larger house.
Along with a lack of new construction over the past 7 or 8 years by builders, another negative factor is that people are staying in their homes longer, up from an average of 7 years to now closer to 10 years. If you are thinking of buying soon in San Diego, call me. I will carefully analyze your affordability position and discuss your goals. We have excellent, proven strategies to help get your offer accepted when there are multiple offers for a quality home.
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