With Increases in Inventory Buyers Can Take a Breath— In Some Parts of the World

Homes like this four-bedroom on more than four acres in Blowing Rock, North Carolina, have attracted lots of interest, and inventory is still an issue.

while an influx of new listings in the u.s. housing

market have begun to alleviate an acute shortage of supply, certain sectors of the luxury market are seeing houses come to the market at a slower pace, keeping the advantage squarely in the hands of sellers.

According to Realtor.com’s Monthly Housing Trends Report, released in June 2022, the number of active listings across the market in the U.S. rose 18.7% year over year— a significant increase from May’s year-over-year rate of 8%.

In 40 of the country’s 50 largest metro markets, stock increased, with Austin, Texas; Phoenix; and Raleigh, North Carolina, recording the most significant gains.

In terms of new listings in June, the largest increases were in the southern markets, notably Raleigh, Nashville; and Charlotte, North Carolina; as well as in Las Vegas.

In the luxury sector, though, it’s still “a high-velocity market,” according to Christy Budnick, CEO of Berkshire Hathaway HomeServices, with a “huge number of buyers vying for that inventory.”

She noted that on the luxury end, appropriately priced properties are still being purchased swiftly, but “you’re seeing homes that are priced a bit too high sitting on the market for longer. That wasn’t the case a year ago.”

Overall, the uptick in inventory seems to be giving buyers at least a chance at taking a breather. “I really believe today’s buyer is taking a breath and being a little more strategic and maybe not quite as emotional,” Ms. Budnick said.

In Miami, after two years of steadily decreasing inventory of luxury condos and single-family homes priced from $2 million to $150 million, sellers are starting to resurface, though numbers are still historically low.

The second quarter of 2022 brought a 47% increase in the number of single-family homes priced over $2 million and a 12% increase in the number of $2–million-plus condos being offered for sale.

The number of active single-family home and condo listings at the end of June, however, was still 23% lower than what had been available on April 1, 2020, at the start of the pandemic lockdowns. Ron Shuffield, president and CEO of Berkshire Hathaway HomeServices EWM Realty, said that by the end of June 2022, inventory priced over $2 million was still below the “optimum balance” of 12 to 18 months of supply.

He pointed to current inflationary pressures and the steep increase in mortgage interest rates thus far in 2022 as metrics to watch. But, on the other hand, he said, Florida is the second-fastest growing state in the country, behind Texas, and is expected to continue increasing its permanent population by over 650 new residents per day, with a growing percentage of these newcomers being considered affluent.

More properties are being offered for sale, he said,

Inventory Rebound

According to Realtor.com's June Housing Report, the inventory recovery accelerated across the U.S., with active listings growing at the fastest annual pace (up 18.7%) ever seen in Realtor.com's data history going back to 2017.

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because “sellers, who have been watching the market closely for the past two years, in the hope of targeting the highest value point in this cycle of changing values, are now sensing that we are close to the high point of this economic cycle.”

He said he anticipates that months of supply “will continue to increase, probably for the remainder of 2022, which will likely push the number of months of supply for luxury properties beyond 18 months [at which point it’s considered a buyer’s market]. This increase in months of supply will place pressure on the rate of price increases and will eventually cause prices to level out.”

Over in Nashville, an area whose luxury market is still extremely strong—with multiple off ers, buyers waiving appraisals, and homes selling for over asking price—purchasers of houses priced at $2.5 million and higher are beginning to ask sellers for concessions and repairs, a sign that the tide might be turning.

But still, inventory is “extremely low,” said Ginger Holmes, president/owner of Berkshire Hathaway HomeServices Woodmont Realty. “We wondered how it could get lower than last year, but it has.”

With only a one-month supply of luxury properties on the market and continued interest from buyers, Ms. Holmes said it’s likely to take six months to a year for things to balance out in her market.

“New construction needs to continue so local homeowners can feel a little more confi dent that they can fi nd another home,” she said. “And builders need to go back to putting houses on the market when they start construction, instead of waiting until they are almost complete due to challenges of pricing.”

Spurred by new construction of single-family homes, the luxury market has shifted in favor of buyers in the coastal New Jersey communities of Margate, Longport and Ventnor.

“Inventory for specifi cally new construction luxury homes has increased dramatically, giving buyers exponentially more leverage than they previously had,” said Troy Rosenzweig, a sales associate with Berkshire Hathaway HomeServices Fox & Roach, REALTORS®, New Jersey. “The only way to have the current inventory absorbed is to decrease the asking price.”

He added that the “accelerants” that were fueling the seller’s market—low mortgage-interest rates, government loans during Covid-19 such as the Paycheck Protection Program, skyrocketing equity markets, and positive consumer sentiment—“have all reversed and are the core reason the market is slowing.”

Yet over in Monmouth County on the northern part of the Jersey Shore, where luxury properties sell for $2 million to $10 million, the pandemic-induced seller’s market is still in full throttle. “Inventory is not increasing,” said Mario Venancio, sales associate at Berkshire Hathaway HomeServices Fox & Roach, REALTORS®, Rumson Sales Offi ce.

He expects more properties to come on the market, as “some sellers will jump in to capitalize on a market with limited supply. I don’t believe we can go from grossly low inventory to an abundance of supply overnight. Many prospective sellers fear they have nowhere to go if they sell.” Mr. Venancio expects it to take 18 to 24 months to build inventory.

Outside the U.S., the inventory situation is also shifting. “Inventory in all markets is still diffi cult to come by, but with construction at full speed, we now have many luxury proper-