Housing inventories

Inventories have reached a record low. I haven't seen any houses on the Redfin feed that would be even close to what we are looking for and it's a bit depressing. The housing market has performed in some unpredictable ways during COVID and during the past week I have conducted some research, hoping to understand the drivers behind our current challenge. I am also researching the housing market for a Systems Thinking class I am taking right now through Harvard. If you aren't familiar with Systems Thinking, it's a phenomenal way to tackle complex problems and I suggest reading Thinking in Systems by Donella Meadows. My professor assigned a theoretical paper on any system with global/industry impact and I will be doing a very deep dive on this in the coming weeks.

This chart shows the year-over-year % increase in home listings in the Washington DC metro area. The drop in listings through the first few months of COVID is really striking, as well as the massive increase in listings in the fall that surpasses the last two years. The interactive graph is available on Redfin to search any housing market in the US. What I find important to understand is that we have been dealing with low inventories for several years now but with mortgage rates at an all time low and demand for home buying up due to COVID, the housing prices have increased significantly. A house that sold for 700K two years ago is now selling for 900K. I mean... that's insane. 2021 started with fairly high inventory but is now falling rapidly. Why is that? I think two things - the lack of inventory makes it difficult for people who are selling to find a new home and people are staying put right now until COVID is over, having just dealt with a hellish winter.

This chart allows you to drill down by city, so I looked at the active listings in each area, which helps me to understand where our best bet might be in finding a house. The inventory is actually not at a record low according to the chart but has fallen quite a bit in the last few months. According to historical trends, we should expect an uptick in spring and summer.

Another fun chart is of course the median sale price by neighborhood. Here you can see that Garrett Park has very volatile sale prices because this is a really small area with very few homes. Areas with more homes and more land are more stagnant, i.e. Alexandria.