COMMENT OF THE DAY RUNNER-UP: SHOULDN’T EVERYBODY BE SELLING INTO A DOWNTURN? 
“So if someone could lend me some clarity on the housing market I would appreciate it. This is how I understand it: Median price is down, number of sales are down, however inventory went down to 3.6 months as well. Houses in the 150-250 range are still doing fine though. The first two issues seem to be related to anemic sales in the luxury market due to the loss of oil/gas workers, but I don’t understand how inventory can tighten when sales are down. Could someone help me out here?” [MrEction, commenting on All Signs Pointing to a Houston Slowdown; A TIRZ for Montrose] Illustration: Lulu
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Logic would dictate that inventory is also down because less homes are coming on the market, either through builders pulling back or current home owners not feeling comfortable in selling and buying something different right now, perhaps until they see where prices settle.
I’d agree with commonsense with it being the bunker down mentality. Fewer people looking to sell and trade up due to either uncertain economic futures for next year or not wanting to deal with a home lanquishing in a falling market and fighting back low bids and extra concessions.
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Would make sense with the vast majority of the home market having been made up of existing homeowners and investors. Will be interesting to see if there’s a significant bounce in first time homebuyers next year, but considering how far out of line prices still are from historical trend lines based on wage growth I wouldn’t expect to see it.
I think to explain it you need to look at it as a shift in the supply curve of homes for sale in the market. Remember your Intro. to Macroeconomics class?
Another way to put it is that people are seeing the price they can get for their house drop compared to last year, and so may put off listing their house to, say, move to the country and retire, until prices rebound ( whenever that may be). And builders who own raw land decide not to begin construction until they figure out what the local market is going to do. So you have less properties on the market ( supply line shift), while sales and median price are also down ( demand line shift).
Inventory levels are very seasonal. A better comparison is from November 2014, when there were 2.7 months of inventory vs. 3.4 last month.
The haters (renters who’ll never be able to afford a home in their lifetime) will always find negative things to say about the market, especially now.
Ok, so seasonally adjusted the inventory actually isn’t shrinking? This summer is going to be a real deciding factor for the housing market I think.