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What Low Inventory and Price Trends Mean for Investors

Smart real estate investments go beyond word-of-mouth figures and perceived popularity. You may hear rumors of “hot” markets, but nothing beats cold, hard data when it comes to forecasting real estate investment viability.

From inventory to median price, breaking down the numbers helps investors locate rewarding ventures at reasonable price points.

According to a new report from real estate website Trulia, national home inventory reached an all-time low in the first quarter of 2017. For the past eight consecutive quarters, for-sale availability has consistently dropped as home prices ascend.


Inventory Report 2017 Q1

While a lack of readily available homes is distressing for conventional home buyers, real estate investors are in a better position to benefit. This holds particularly true in markets with robust home price recovery, where the potential for quick returns is high.

Consider the following markets as examples of how pricing and inventory is fluctuating throughout the nation’s largest markets:

New York

Home values in the New York City metro area are near their pre-recession peak with a 96 percent price rebound. Unlike some metros with drastic drops in inventory, the number of homes for sale in New York dropped 12 percent since the first quarter of 2012.

Known for its expensive real estate, New York starter homes are costlier at a median of $199,000. Trade-up homes share a median list price of $349,900 and premium homes have price tags around $696,000.

Austin

Thanks to a growing local economy and job market, Austin home values have surpassed their historical high at a 116 percent price recovery. Inventory is down a moderate 19 percent, creating slight competition for buyers in Austin.

The median price point for starter homes in Austin is $113,500. Trade-up and premium homes are slightly higher at medians of $181,333 and $395,750, respectively.

Denver

In Denver, home values have recovered 136 percent compared to their pre-recession peak. Over the past five years, inventory dropped 61 percent. Despite drastically rising home values and apparent demand, Denver’s median starter home list price is a cool $119,967.

Denver homes for sale that fall within the trade-up category cost a median $216,333, while premium properties hover around $415,833.

Cash Talks…

For investors with all-cash financing, these conditions can be favorable. Usually, an all-cash offer surpasses those of mortgage borrowers, who traditionally account for most of the bidding competition in any given market. The sense of security, coupled with a quick close, are highly attractive qualities to complement an initial offer.

It’s a Good Time for Sellers

Another advantage for real estate investors within low-inventory promising markets is the potential for flipping. With buyer competition mounting, being a seller of any sort puts you in an enviable position.

Investors share the financial security and peace of mind that their properties will likely sell once placed on the market in move-in ready condition. In some instances, your real estate investment may deliver even larger gains than anticipated.

Whatever your strategy, it’s a good time to sell a home in some of the nation’s largest real estate markets.

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About the Author...

Jennifer Riner graduated from the University of Wisconsin-Madison with a degree in journalism. After college, she began working full-time in marketing at Zillow doing a mix of blog outreach and writing.

She now writes for Inman Local, Zillow Group, Z Chicago Real Estate, and Accelerank Web Marketing.

Comments

  1. JD Hawkins says:

    Good stuff! Appreciate some info on Lease Purchase (Lease Option)

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