Why Housing Inventory Is Rising Now

Performance Property Real Estate Question

Q: Housing inventory seems to keep falling. Is that trend going to continue? Terry, Springfield, NJ

A: Housing inventory in NJ has actually been rising so far in 2021 although housing inventory is still incredibly low historically. Housing inventory is nowhere near the equilibrium point of 6-7 months where home prices stabilize and beyond which home prices start to move downward. The recent increase in home inventory is being driven by the fact that home affordability is becoming more of an issue as home prices have been rising by double digit percentages. Double digit % home price changes can’t and won’t last forever and the sharp increase in home prices is finally starting to create some price resistance in real estate as homes for many buyers, particularly first time home buyers are out of reach financially. We have a very long way to go before home prices will stabilize and then go down, but the increase in housing inventory is a welcome sign for the health of NJ’s residential real estate markets. Thanks for your question, Terry.

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