Many in the real estate industry believe there is a listing shortage, but a close look at the numbers suggests buyers in most markets are purchasing homes in increasingly larger volumes—even if some of those sales involve off-market homes not listed for sale.
In July there was a 5.1-month supply of unsold existing homes, unchanged from June but down from a 6.3-month supply in July 2012, according to the
National Association of Realtors(NAR). But despite the lower inventory, the volume of home sales continues to increase.
“Existing-home sales,” NAR reported, “have stayed well above year-ago levels for the past two years, while the median price shows seven straight months of double-digit year-over-year increases.”
…In real estate, sales have been increasing month after month for nearly two years and prices are 11 percent higher than a year ago.
“The robust housing market recovery is occurring in spite of tight access to credit and limited inventory,” said NAR Chief Economist Lawrence Yun back in May of the April numbers. “Without these frictions, existing-home sales easily would be well above the 5-million unit pace.”
But it’s not just off-market foreclosure auctions that account for the rise in sales despite a lack of listing inventory. Buyers and their real estate brokers are getting creative in buying off-market inventory in other ways as well. These creative buyers and brokers are contacting distressed homeowners and other potentially motivated sellers to see if they want to sell even if they have not yet listed for sale. They’re finding homeowners who are about to list through word of mouth or social media, and they’re persistently reaching out to banks—the most success comes when dealing with smaller local banks—that have foreclosure inventory not yet listed for sale.
Many of these REOs are not listed for sale yet and are being listed at a painstakingly slow pace from the perspective of buyers who are hungry for more inventory to purchase. Still, the presence of this unlisted REO inventory should give buyers hope that they will find a property (or properties) to purchase, provided they are willing to be creative and patient in their search.