Will The Las Vegas Housing Inventory Hit Bottom in 2013?

What will happen to the Las Vegas Housing Inventory in 2013?

According to the NAR, Inventory declined to 2.14 million in October down from 2.17 million in September. Inventory is not seasonally adjusted, and usually inventory decreases from the seasonal high in mid-summer to the seasonal lows in December and January as sellers take their homes off the market for the holidays. Read More: Selling your Home? Know How Much Your Home Is Worth Compared to Homes Sold or is Currently Listed in Your Area!

If we see the usually seasonal decline in December and January, then NAR reported inventory will probably fall to the 1.80 to 1.85 million range. That would be the lowest level since January 2001.

Important: The NAR reports active listings, and although there is some variability across the country in what is considered active, most "contingent short sales" are not included. When we compare inventory to earlier periods, we need to remember there were essentially no "short sale contingent" listings prior to 2006.

Our Inventory decreased 21.9% year-over-year in October from October 2011. This was the 20th consecutive month with a YoY decrease in inventory. It appears that inventory will be down sharply YoY in November too.

Months of supply declined to 5.4 months in October and is now in the normal range.  With these, we expect months-of-supply will be under 5 in December and January for the first time since early 2005.  Read More: Search for Homes for Sale in any Las Vegas Community.

Real Estate agents normally say that inventory is low because people don't want to sell at the bottom. In a market with falling prices, sellers rush to list their homes, and inventory increases. But if sellers think prices have bottomed, then they believe they can be patient, and inventory declines. Another reason is that many homeowners are "underwater" on their mortgage and can't sell.

If prices increase enough (probably around 5% in 2012) then some of the potential sellers will come off the fence, and some of these underwater homeowners will be able to sell. It might be enough for inventory to bottom in 2013.

Another issue is if the Mortgage Debt Relief Act of 2007 is allowed to expire at the end of 2012. If the act isn't extended, many of the contingent short sales will be pulled off the market. Although this doesn't impact active inventory directly, it might have an indirect impact.

We at The Snyder Group want to be your free real estate resource -feel free to Reach Out To Us with your questions or concerns regarding short sales, options to foreclosures or how the Las Vegas real estate market is currently performing.

Our real estate agents have a wealth of local knowledge and experience in all the facets of residential real estate whether looking for a large custom home or a condo on the famed Las Vegas Strip - Our agents know our area the best. If you want more information, Contact The Snyder Group for a free consultation and we'll be happy to listen.

This blog was drafted from an article written by Bill McBride and is published in www.Calculatedriskblog.com to see the original article, Click Here