What would a frenzy of inventory look like?

There has only been a 15% year-over-year increase in the number of homes for sale in 2024, which isn’t that noticeable, especially to the casual observer. Plus, the top-quality homes still get swept off the market quickly, so there aren’t many great listings lying around unsold.

For an frenzy of inventory to be dangerous, it would take so many new listings to hit the market that there aren’t enough buyers to grab all the top-quality homes for sale.

There will always be the half-baked offerings looking to get lucky.

There is only a problem when the great homes aren’t selling (aka switching to a buyer’s market).

Though there has only been 15% more listings this year, the current active inventory is about 30% higher than last year. There is the sign that buyers are being more picky, and that the pressure on pricing is rising. Sellers either need to do more sprucing up, or sharpen their price. Some need to do both.

I have said before that I thought the market had been so dry that the pent-up demand would absorb a 15% to 20% increase in the number of homes for sale. Well, here we are! There have been 6% more sales this year, which didn’t pick up ALL the extra supply – just the best ones for sale.

I think we will call 2024 the year of equilibrium where the supply and demand has been more balanced than in recent years. I’ll resist calling it a ‘normalization’ because nothing feels normal these days! But statistically it looks like a decent balance.

What would happen if/when the flood comes?

If 15% to 20% was reasonably absorbed this year and it balanced the supply and demand, then any increase in 2025 above that would be nervous time.

How much growth above the 2024 homes for sale can the market endure?

I’m going to say not much more, and it’s why sellers should get out while they can in early 2025.

Adding ANY more inventory in 2025 above this year’s number of homes for sale would only get absorbed if rates drop to 6% or lower – which could happen – and the political circus dies down.

If the 2025 NSDCC inventory matches, or slightly exceeds, the 2024 red line below, then we should be fine. If it pops higher – and especially if it pops higher in January – then stagnation could set in as buyers wait-and-see where it goes.

You’ll be able to watch it all transpire right here at bubbleinfo.com!

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