LA Times: "Shortage of homes for sale creates fierce competition"

by CalculatedRisk on 6/10/2012 01:15:00 PM


From Alejandro Lazo at the LA Times : Shortage of homes for sale creates fierce competition


“When the expectation is that prices will fall further, marginal sellers will try to sell their homes immediately. And marginal buyers will decide to wait for a lower price. This leads to more inventory on the market.

But when the expectation is that prices are stabilizing (the current situation), sellers will wait until it is convenient to sell. And buyers will start feeling a little more confident.


This leads to less inventory on the market.”



I thought it would be good to provide a third party report on the housing supply problem. The above makes sense. The problem is that prices will start to move up. The following chart shows the latest release of the S&P/Case-Shiller (CSI) home price indices. As you will note, most of the cities are showing a positive change from March/February 2012. I would expect this trend to continue in a positive direction due to the lack of supply!