There’s a bit of positive news out there for buyers who have become increasingly frustrated in the starter markets. According to Trulia’s Inventory & Price Watch Report, this is the first time in over two years that “starter and trade-up homes” have shown the largest inventory increases since 2014 rising 4.8% and 3.5%. It’s the fastest annual growth seen in that starter inventory in over six years. “Seeing that starter and trade-up inventory increase for the first time in six years at this rate is a sign of inventory sitting longer on the market and not new homes being built,” observes Felipe Chacon, housing economist at Trulia.
The most expensive metros like San Jose and Los Angeles, according to Trulia’s data are “seeing rising inventory that may be due to slowing demand with homes sitting on the market longer.” It’s no surprise that California metros showed top year-over-year inventory increases. Here’s a look at those numbers. San Jose topped the list with a 55.4% increase. Los Angeles comes in at 28.5 increase, San Francisco follows at 28.2% and finally, San Diego rings in at 25.8%.
You can’t talk about pricey West Coast metros/markets without mentioning Seattle. There a very hot market has slowed with a 40.5% year-over-year increase in inventory. “We are seeing these big jumps in inventory being driven by the lack of exhaustive demand. Houses are just sitting longer with no new infusion of homes coming on the market,” Chacon said. Makes sense if you’re a seller who doesn’t need to sell at this time that you would hold off before listing your home.
Let’s look at Days On Market (DOM) in a few of these California metros to get a good idea of just how long some luxury properties are languishing. A 2,730 square foot home in the pricey area of Saratoga, directly west of San Jose recently had a price cut to $2,299,000 from the original listing price of $2,665,000. This home on a cul-de-sac with a large yard and a pool has been on the market for 74 days.
Heading to Beverly Hills, a traditional-style home built in 1923, which is close to the Beverly Hills Hotel has sat on the market for 229 days. The current listing price of $8,999,999 is down from $11,250,000 when it first came on the market. “Since homes are sitting longer it’s no surprise inventory is piling up. “There just aren’t as many enthusiastic buyers as there were a few years ago,” explains Chacon who researched and wrote the report. Look for this trend to continue especially in California’s luxury markets.