Housing Availability Trends Toward Zero in Pretty Much All Metros

Sometimes too much of something can become a problem. Certain foods in excess are bad for your health. Too much wet or dry weather can damage crops. And too much of a housing scarcity can upend markets and require reconsideration of how markets are acting.

Black Knight home price housing data shows that single-family house inventories remain at historical lows, at least in the top 100 US metros, and in some are actually trending toward zero. Additionally, days on market have also been hovering at historically low levels, “often just a few days,” according to the firm. “The results of this study, based on data from our HomePriceTrends analytics platform, show severe and accelerating chronic shortages in every market, in every price range.”

Black Knight uses categories from “hot” to “distressed” as part of a qualitative assessment of markets. Typically, between two-thirds to four-fifths of markets are in one of the three middle categories of “good,” “normal,” or “soft.” Only a tenth of markets are either “distressed” or “hot.”

But, as the company notes, “This, however, is not a normal cycle.”

Currently, out of the top core-based statistical areas, or CBSAs, 4% were good, 80% strong, and 16% hot. None were in lower categories, nor were any in the next 100 largest CBSAs.

Low supply helps explain home prices up more than 10% in the top 100 markets, even though, in response to inflation, the Federal Reserve has been pushing interest rates upwards.

Since the housing market crash of the Great Recession, according to Black Knight, months of remaining inventory, or MRI, has been around five months. Now, the national average is about two months.

Taking Los Angeles, Palm Beach, Fla., and Phoenix as markets that “typify this trend,” the report noted that in the three markets, “not only have MRI figures converged toward less than two months in recent years, but that higher-priced homes, which have historically required substantially more time to sell, are also increasingly in short supply.”

Black Knight identified seven factors contributing to the current shortages: technology that makes finding and buying a home more efficient, long-time dovish US monetary policy with low interest rates, an increase of remote work, the trend of institutional investors buying homes to rent out, restrictive zoning, supply chain problems for developers, and people with property that haven’t wanted to sell because they don’t want to risk not finding a new home.