Back in May of 2010 I wrote an article for BiggerPockets with the title of, “A Saw Tooth Recovery.” By the title you can guess that the housing recovery was expected to see ups and downs in both prices and inventory until a full recovery could be expected.
Two years later it seems that indeed we are in the middle of a Saw Tooth Recovery. As predicted, we are just now experiencing a bottom in inventory and a resurgence of prices in most markets. If you have inventory to sell you are in a great position, often selling into an appreciating market measures by multiple offers and low days on market. On the other hand if you are short on inventory you are most likely scrambling to meet your goals for this year.
If you have been keeping your ears to the ground you, like most investors, keep hearing a persistent rumor that banks will be releasing a greater portion of their pent up forclosure inventory after the first of the year. Rumors… I don’t think so.
In fact, if you are paying attention, you will start to make the needed adjustments in your business to ensure that as inventory increases, your business can weather the almost certain reduction in prices. Just as could be anticipated in a sawtooth recovery.
Here is the key point…
As inventory goes up, prices will be going down. Don’t get caught paying today’s prices for inventory that you have to discount significantly to get sold in 6 months.
Photo: Hieu Ng