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Three Cents Worth: Manhattan's Inventory Skyfall

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller presents some startling inventory stats.]

One of the biggest housing market complaints these days pertains to the lack of inventory, both existing and new development. Many would assume the complaining is only coming from buyers and real estate agents and not from would-be sellers. Of course, for those who are selling it should be a good time since the competition is limited, right?

If inventory is so low, why aren't sellers coming out of the wood (cast iron, brick, etc.) work to take advantage of the limited competition? A big unsung factor is that many sellers can't sell (sellers when they sell become buyers, and if they don't qualify for a trade up they don't sell?this is more than a third of US mortgage holders)?otherwise we'd see a surge of inventory enter the market this spring.

But we aren't seeing that.

I've recently presented charts here on the issue of falling inventory and how we are off to a slow start in 2013. In order to provide additional context I thought I'd show how far out of whack inventory levels actually are in 2013.

Some thoughts:

· Last month (February) inventory was roughly as far below the 10-year average as it was above the average in February 2009 (the following month was the 12-year peak at 10,445) as inventory ballooned after the collapse of Lehman.
· Inventory is 51.3 percent below the same-month total in 2009 and 33.2 percent below the 10-year monthly average.
· This isn't some sort of "sellers aren't confident about the future so they won't list" psychology BS?it's happening across the US right now because "housing is local, credit is national."
· Snowball: The absence of low-to-negative equity would-be sellers keeps non-credit-challenged would-be sellers from listing until they find something to buy.
· Don't look to new development to solve the problem. New development, both regionally and nationally, is historically 10 to 20 percent of sales, so what about that other 80 to 90 percent of supply?

Tight credit is keeping supply off the market and credit will likely remain tight this year. So how does the housing market get replenished with fresh inventory to keep pace with sales this year?

It doesn't.
· Matrix []
· Three Cents Worth archive [Curbed]