With home sales on the rise the amount of available property is becoming more limited for many potential buyers. According to MercuryNews.com, in August of 2012 there were 2.47 million homes available, 18% less than were available in August 2011. Some property owners who bought when prices were inflated are still sitting on their homes, not willing to sell at current price levels. This is leading buyers to look to new construction for the houses they want.
“I see a continuing demand and scarcity until the amount of housing inventory is increased significantly. Our new home inventory has not kept up with the needs of our residents. Over the past 7 years, to have kept up with the ongoing demand and population growth in California, we should have been building about 250,000 housing units. However, according to information heard recently from the California Association of Realtors (CAR), we have only built an estimated 23,000 housing units per year,” said Dawna Davies, owner and broker of the Davies Company Real Estate.
Low inventory of homes has increased the demand for new homes, helping builder confidence reach its highest level in more than six years as reported by MercuryNews.com. Barry Rutenberg, The National Association of Home Builders (NAHB) Chairman attributes builder confidence to improved views of current sales conditions and future traffic of prospective buyers.
Though sales and construction levels are still lower than healthy levels, research indicates that the market is making steady improvements. There has been an increase in new home construction, housing starts and building permits. CNNMoney reported in June 2012 that housing starts are the highest they have been in four years.
“The high numbers of building starts are a strong indicator of optimism. They indicate builders believe they will sell their new home inventory, after years of sitting with projects ready to build,” said Davies.