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Housing Market Inventory Surge: What It Means

Updated: Feb 11

Don’t let the current housing market inventory surge stress you out. Learn how to make the most of it with our tips for buyers and sellers.

The housing market is currently experiencing a significant increase in inventory levels, as more and more homes are being listed for sale. While this abundance of choices may seem like a positive for homebuyers, it is also putting pressure on home prices, as sellers compete to sell their homes in a crowded market.

In this article, we will take an in-depth look at the impact of the current housing market inventory surge on home prices and what it means for both homebuyers and sellers.

Understanding the Principles of Supply and Demand in the Housing Market

The basic principles of supply and demand play a critical role in determining home prices in the housing market.

In a balanced market, supply (homes for sale) and demand (homebuyers) are relatively equal, leading to stable home prices. However, when there is an oversupply of homes, demand does not keep pace, and sellers are forced to compete with each other, leading to a drop in prices.

For example, consider a scenario where there are 100 homes for sale and 100 potential buyers. In this scenario, competition among sellers is limited, and prices remain stable. However, if the number of homes for sale increases to 150, with the same 100 buyers, sellers must compete with each other to attract buyers, leading to a drop in prices.

The Impact of the Current Inventory Surge on Home Prices: Real-Life Examples

The current housing market inventory surge is putting downward pressure on home prices in many areas across the country. For example, in San Francisco, the median home price has declined by 7% in the last year due to the increase in inventory levels.

In Seattle, the number of homes sold for less than their original asking price has increased by 25% in the last year, also due to the increase in inventory levels.

What Does the Current Inventory Surge Mean for Homebuyers?