VIDEO: March 2023 Housing Inventory Update
For the last 12 months I have been manually tracking inventory data in 54 large counties across America. At the end of each month I go through Zillow and mark down the number of houses For Sale & Rent.
This process gives me (and you) an inside look into inventory figures on the US Housing Market before they're officially released by sources such as Realtor.com. I've found it to be very helpful in understanding the trends in the US Housing Market.
In the video and post below, I dive into the details of the inventory data for March. The results were a mixed bag. Some markets improved while others regressed. Understanding these trends is imperative for you as a homebuyer or investor. I would encourage you to watch the video first, then read the blog post for more detail.
(Note: this inventory data only tracks single-family houses and townhomes. Condos/apartments are not considered)
15 Counties had an increase in For Sale Inventory in March
March was a much better inventory month for the US Housing Market than February. Coming out of the winter doldrums we saw more sellers list. Which means that inventory increased month-over-month in 15 of the 54 counties I track. There were some especially sizable, double-digit percentage increases in inventory in Boston, Seattle, Austin, Minneapolis, and Washington DC.
The Bay Area logged decent inventory increases in Santa Clara County and Alameda County.
It's also worth noting a market like Dallas saw positive inventory trajectory in its three largest counties (Collin, Dallas, & Denton) in March. I had heard some would-be homebuyers in Dallas warning about a depletion of inventory in the winter. But that seems to have subsided.
Markets with small declines in inventory were scattered across Houston, Atlanta, and Boise. Based on seasonal trends, I would expect these counties to be in positive inventory growth territory next month in April.
But now the Bad News: California still Losing Inventory
There were still some hefty inventory declines in certain markets. Particularly in California, which is suffering from an acute shortage of new seller listings right now. Sacramento County was the most impacted, with a nearly 20% inventory decline month-over-month.
Riverside and Fresno were also big inventory losers. These markets, along with Sacramento, had an increase in pending listings. Suggesting that perhaps there's another wave of buyers moving to Central California from the Coast.
Phoenix is a market that looks similar. Inventory went down 10% on the month in Maricopa County, and there was also a hefty increase in pending listings. Suggesting that the inventory decline was driven more by an increase in buyers than a shortage of sellers.
Los Angeles and San Diego Counties lost inventory as well, but not as much. The inventory losses in these counties were driven by a shortage of new listings rather than an increase in buyers (pending lists were flat in LA and went down in SD). Las Vegas tracks similarly, where inventory declined by 13% based mostly on a decline in seller listings.
Florida also lost inventory on the month. Particularly in Jacksonville, Miami, and Tampa. However, I'm not as concerned about these inventory declines since Florida normally sees inventory go down at the start of the spring (Florida's Housing Market operates on a different "clock" than the rest of America).
Rental Inventory Way Up
One reason certain markets are struggling to build For Sale Inventory is because many would-be sellers are electing to list their vacant properties For Rent.
Particularly in Southeast Florida near Miami. Counties like Broward and Palm Beach have seen a 200% increase in Rental Houses on the market year-over-year. To be clear - that means THREE TIMES as many vacant houses for rent in March 2023 compared to March 2022.
And this For Rent inventory surge is occurring pretty much everywhere. Atlanta, Riverside, New York, Salt Lake, Dallas, Philadelphia, Cleveland, San Diego, and Los Angeles are markets where rental inventory has gone up by more than 100% (doubled).
This surge in rental inventory is pushing down rents in some markets across America. In particular, Phoenix and Las Vegas are the first metros to have negative YoY rent growth. Other markets will likely be in the negatives soon as well (looking at you California. I see a lot of rental price reductions right now on Zillow.)
More vacant units to go along with declining rents will ultimately be a problem for landlords and the Housing Market overall. Because it means investors will need to lower the price they pay for homes. Declining rents and more vacant properties will also force some investors to sell, thereby increasing For Sale Inventory.
For Sale Inventory peaked in October 2022. Where will it go the next 6 Months?
The number of homes For Sale peaked in October of last year at 210k in the 54 counties I track. That level of inventory is now down to 147k in March 2023, a 30% reduction.
That, on the surface, looks bad for homebuyers. However, it is very normal for inventory to go down seasonally in the winter. Which is why year-over-year comparisons are best for understanding the true direction of inventory in your market.
We can see that For Sale Inventory (blue line) in March 2023 is still up by 70% from where it was one year ago. Still not where it needs to be. But a sizable improvement. Especially in certain markets.
Official Inventory Data coming Next Week
Note this this inventory data is preliminary and comes from me manually tracking listings on Zillow.
The official inventory data from Realtor.com will be released next week on Reventure App. I will make sure to send out an e-mail, and also do an accompanying video, so you all can know when to check.
In the meantime I would encourage you use to Reventure App to see the ZIP Code inventory trends in your market through February. I was noticing some interesting trends in Chicago in particular.
Note how certain ZIP Codes in Blue have heavily declining inventory. These markets are getting tighter, and better for sellers. While other ZIP Codes in red have inventory that has gone up a lot YoY, which are getting better for buyers.
The more that inventory has gone up in your ZIP Code, the better the chance of price declines in the future throughout 2023.
To access Inventory Growth Data in Reventure app, go to "Select Data Point", then "Click to see More", then "Sale Inventory Growth YoY".
Until next time - this Nick. Talk to you all soon.