‘For Sale’/ ‘Price Reduced’ – Inventory Is Much Higher Than The Market Understands

Jon Market Commentary, Real Estate

I took a casual drive around a several upper-middle/upper-end areas in central Denver this morning. I would just randomly turn down blocks and I was stunned at the number of ‘for sale’ and ‘price reduced’ signs I saw. The Denver Country Club area, the high end sections of Capitol Hill plus Washington Park and Platte Park. It’s starting to look a lot like it did in 2007/2008, when stranded flippers, over-mortgaged homeowners and foreclosure listings started to flood the market.
The inventory of homes for sale is much higher than is being broadcast by the industry associations and Wall Street. Furthermore, the National Association of Realtor’s ‘months inventory’ metric is likely understated by quite a bit. The NAR takes the end of the month MLS inventory for the month being reported and then divides that number by that month’s seasonally adjusted annualized sales rate (SAAR).

This post was published at Investment Research Dynamics on September 14, 2014.