It’s been a solid couple of years since the housing market and inventory threw us for a loop. But while building supply issues have leveled out and much of our world has returned to normal (or a new normal, at least), housing inventory remains a frequent topic in the media. So where does the housing inventory stand, comparatively? Here are a few things we’re seeing.
The reasoning behind the DMV’s inventory issue
When we talk about inventory, there are separate breakouts for national, state, and market-level data. Then, beyond that, there are different breakouts by time period as well as new versus existing construction. Needless to say, there are a lot of numbers. So, when you hear about housing inventory struggles, don’t necessarily take it at face value; look into which area is being discussed as well as over which time period. Things in 2020-2021 got dicey, so what we’re really looking for is a rebound from that period in time.
The catch is that over the past few years, some markets gained a significant number of residents, while others lost them.
In general, the DMV has a fair amount of resident turnover, much of which is owed to the transient and global nature of the area. Even with that, the most recent census showed a continued period of fast growth for our area, with more than 700,000 people having moved to the metro area over the past decade. Much of that growth is in the District proper or directly surrounding counties, however, it does edge out to the more sprawling metro areas as well. Numerous sources predict that trend to continue, which means a need for continued additional housing.
More area numbers and trends
So where do we stand on the housing inventory situation currently? In the year-over-year, last month, national inventory rose slightly from 3.2 months’ worth of supply in July 2022 to 3.3 months’ worth in July 2023.
Locally, the National Association of Realtors maintains that the D.C. metro remains at a high-level housing shortage status, with one new single-family housing permit being issued for every five jobs—or, in other words, 20 percent. However, when looking at supply compared to overall permit levels, which would include multi-unit housing (like condos), the Association lists the area as having a sufficient supply, with a permit being pulled for every two jobs (50 percent). This is just one of many inventory indicators, but it does leave room for optimism.
Another interesting number that plays into overall market trends is the uptick in foreclosures shown through the National Association of Realtors Q1 2023 report. Whether that trend will continue is yet to be determined, but with the sharp rise housing prices took in recent years, paired with climbing interest rates, it’s both unfortunate and yet not entirely surprising. While it doesn’t directly feed inventory in a huge way, it does translate to overall market movement.
As we look at the months to come, we should watch the numbers of permits, new and existing home inventory, and other factors that influence the market, including continued area growth and interest rates, among others.