Movoto Analysis: Housing Inventory Drops to Lowest Level in Three Years

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The country's housing inventory has fallen to its lowest point in three years. How has this affected the market? First-time home buyers are struggling to find homes.

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“Right now, the housing market is a like a high school dance. Everyone is waiting to see who’ll be the first person to go on the dance floor.”

Housing stock fell in January, leaving first-time home buyers at the mercy of the real estate market. According to a Movoto Real Estate analysis of 34 major cities, inventory is the lowest it’s been in three years.

Movoto Real Estate’s analysis showed that there are currently 88,000 homes listed on the Multiple Listing Service (MLS) for the 34 cities the company tracks. This is a decrease of about 47 percent from the market’s inventory peak in September 2010, and 19 percent from January 2012.

The decrease in inventory over the past month indicates first-time home buyers will continue to struggle while searching for a home.

“It’s difficult for first-time home buyers,” said Mark Brandemuehl, Movoto’s VP of Marketing. “Until more homes come on the market, either from banks or investors, first-time home buyers will compete with each other at an unprecedented level.”

Typically, homeowners stay in a house for five to seven years before purchasing a new home. Yet five to seven years ago the housing market was in the midst of a housing bubble, which collapsed, sending reverberations to the present.

Today many homeowners who purchased homes during the housing bubble have homes worth far less than what they paid for them, and are waiting for the market to improve before putting their properties up for sale.

Nonetheless, there are higher-quality homes being sold by homeowners who purchased their properties more than seven years ago. Typically, these types of homes are outside of most first-time home buyers’ price range.

The end result is that first-time home buyers will struggle to purchase homes until past homeowners who purchased their properties five to seven years ago decide the market is strong enough to warrant selling.

“Right now, the housing market is a like a high school dance,” Brandemuehl said. “Everyone is waiting to see who’ll be the first person to go on the dance floor.”

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About Movoto
Movoto Real Estate launched in March 2006, providing innovative, easy-to-use research tools with ready access to a network of experienced local real estate agents. was the first real estate website to bring a map front-and-center into the home search experience right on its homepage. Movoto now offers its free services in over 30 states. In 2011, Movoto was named #13 on the Inc. list of fastest growing private real estate companies.

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