Decreasing Supply of Real Estate Inventory in San Francisco
“Economic forecasters attempt to predict the housing market based on unemployment, the fed, or consumer confidence. However, there’s another highly relevant indicator that is frequently overlooked: real estate development activity. Lately, these experienced players are growing more active again. Land sales are up, and developers are busy securing plans and permits.
Nationally, we gain about one million new households each year. If developers don’t start building again soon, we will be faced with a shortage of available property. Locally, Realtors are already complaining about a short supply, which could be a game-changer this spring. A key measure of demand is Months Supply of Inventory (MSI), a figure which estimates the number of months required to clear the current inventory at the current rate of sales. As the graph to the right indicates, the MSI has been steadily dropping – a good sign for homeowners and a heads-up for homebuyers. The time for fence-sitting may be coming to an end.”
Read this article and more in Zephyr’s Winter 2012 Quarterly Newsletter.