Inventory Surge in 2025?
There are several reasons why I think the local inventory will surge in 2025. It will be due to several causes contributing more houses for sale, and all combined it may look like a flood in some areas.
Been Trending That Way in 2024 – The inventory this year has been +15% more than last year, making it look like we have already hit bottom, and the number of listings will keep growing. It may not get back to the 4,000+ like it was in the pre-covid years, but 3,000+ should be a lock in 2025 (+22% over this year).
2024 Leftovers – We have 100+ of this year’s listings waiting until 2025 to not sell (unless they adjust).
More Baby Boomers Are Dying – According to the CDC, the number of deaths per year in the U.S. has been steadily increasing, in part because of the Baby Boomers’ advancing age. Estimates suggest that Boomers will account for millions of deaths over the next two decades as they continue to reach their 80s and beyond. There were 1.6 million boomers who died last year, and the number will be above two million by the year 2030.
Prop 19 – Those who have already inherited a home from their parents or grandparents since 2020 have had to occupy the property as their primary residence to inherit the lower property tax rate too. But the old family homestead needs work and/or the other siblings want their dough. Renting the house triggers the higher property taxes, so that’s no longer a viable choice. More of these will decide to sell instead.
Politics – The 49% who don’t have the election go their way will threaten to move to cure their ills. Most won’t actually get around to it, but I’m guessing more will move than before.
Jackpot – In 2023, total U.S. credit card debt surpassed $1 trillion for the first time, reflecting a significant increase over pre-pandemic levels. More homeowners in that group will throw in the towel and finally decide to sell the house to lighten the load, and move out-of-state where they can live the rest of their life on their home-sale proceeds.
There is enough demand to soak up all of the additional inventory – but at what price?
Red Alert for 2025
I thought the run-up to the election would cause potential home sellers to wait it out.
Wouldn’t it make sense to NOT list your home in the month or two before the most contentious election in history? Certainly home sellers would have foresight and believe that buyers would be distracted. Everyone would be doing the wait-and-see!
Nope – and we’re not done with new listings this month and it's October 29th! There will probably be another 10-20 homes go on the market before Friday (plus late-reporters).
It means that a surge of listings is in the works.
Our stager told Donna yesterday that she is already getting booked up for January. Our regular contractors have been voicing the same thing – they are very busy, and getting busier.
How about this as an indicator:
I already have three listings signed for January/February, and another 2-3 in the works. Never before have we had a January listing signed in October!
It means the first quarter of 2025 is going to be insane – a frenzy of inventory!
What would a frenzy of inventory look like?
There has only been a 15% year-over-year increase in the number of homes for sale in 2024, which isn’t that noticeable, especially to the casual observer. Plus, the top-quality homes still get swept off the market quickly, so there aren’t many great listings lying around unsold.
For an frenzy of inventory to be dangerous, it would take so many new listings to hit the market that there aren’t enough buyers to grab all the top-quality homes for sale.
There will always be the half-baked offerings looking to get lucky.
There is only a problem when the great homes aren’t selling (aka switching to a buyer’s market).
Though there has only been 15% more listings this year, the current active inventory is about 30% higher than last year. There is the sign that buyers are being more picky, and that the pressure on pricing is rising. Sellers either need to do more sprucing up, or sharpen their price. Some need to do both.
I have said before that I thought the market had been so dry that the pent-up demand would absorb a 15% to 20% increase in the number of homes for sale. Well, here we are! There have been 6% more sales this year, which didn’t pick up ALL the extra supply – just the best ones for sale.
I think we will call 2024 the year of equilibrium where the supply and demand has been more balanced than in recent years. I’ll resist calling it a ‘normalization’ because nothing feels normal these days! But statistically it looks like a decent balance.
What would happen if/when the flood comes?
If 15% to 20% was reasonably absorbed this year and it balanced the supply and demand, then any increase in 2025 above that would be nervous time.
How much growth above the 2024 homes for sale can the market endure?
I’m going to say not much more, and it’s why sellers should get out while they can in early 2025.
Adding ANY more inventory in 2025 above this year’s number of homes for sale would only get absorbed if rates drop to 6% or lower – which could happen – and the political circus dies down.
If the 2025 NSDCC inventory matches, or slightly exceeds, the 2024 red line below, then we should be fine. If it pops higher – and especially if it pops higher in January – then stagnation could set in as buyers wait-and-see where it goes.
You’ll be able to watch it all transpire right here at bubbleinfo.com!
