Explaining Southern California's economy

Supply and demand imbalance continues to distort real estate markets

Existing Homes Sales Jump More Than Forecast

David McNew/Getty Images

Tract homes in Santa Clarita. Both the U.S. and Southern California need to see a lot more of these getting built.

Location, location location — those are the three most important words in real estate. But buyers and sellers have added a new word to their vocabulary: inventory.

For months, everyone who closely follows Southern California real estate has been preoccupied with supply-and-demand. Demand is surging, but there aren’t enough houses for sale, especially in the western U.S. Nationally, the number of homes for sale is the lowest in 14 years. That’s driving prices higher. 

But on the flipside, the supply crunch has depressed sales. The National Association of Realtors says new homebuilding is the solution, but for that to happen, credit needs to become more widely available. 

Relief is coming — but slowly. Housing starts maintained momentum in January, the Census Bureau reported. But they’re still tracking well below the 1.5 million annual average they’ve hit over the past four decades.

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