Absence of Inventory keeps housing supply limited

[AJ Wong]

There is lots of concern, discussion and hesitation amongst potential property purchasers or investors for fear of a recession and decline of property valuations and/or market conditions. 

Although many variables are valid the statistics support that the market is not quite heading for a 2008 type collapse or adjustment. 

If Real Estate is a reflection of supply and demand, the opportunity for investment might be narrower over the long term. One indicator that supports a reduced future housing supply is the number of new construction permits issued. Future construction permits dropped to their lowest since 2016. Additionally total housing inventory total 970k units last year, an increase from 2021 but the second lowest supply on record.

Low supply is one of many factors contributing to existing to a twelve year low in existing US home sales in December, it may also be an indication that the 'bottom' of the market is being reached. 

Locally throughout the Oregon and California Coasts sales activity and investor interest remains robust. Prime income producing properties are selling quickly with significant interest, albeit after a brief stall as rates spiked at the beginning of Q4 2022. 

As multi family and income producing properties get absorbed and newer development is delayed there is potential that over the course of the next 2-5-10 years the quantity of investment grade properties is reduced further. Another consideration is the deterioration of the commercial office space market, as the dust settles and investors reassess portfolios, it is possible that the interest and demand for residential income producing properties further increases.

According to the association of Realtors a 4-7 month supply viewed as a healthy balance between supply and demand. In December 2022 properties typically remained on market 26 days and 57% of sold homes were on market less than one month. 

It would be interesting to see some metrics on multi unit or vacation rental eligible properties specifically. I'd wager that properties priced close to their final sales price are selling as quick or quicker than single family residential homes.

I'll try and pull some comps for 5+ units on the Oregon Coast and the average days from pending to closed. 

What are you seeing in your local market? 

https://www.reuters.com/market...