- Since March 2020, the number of homes available to sell fell by 600,000 to just 376,000.
- In the same period, the number of new real estate agents grew by 156,000 to over 1.5 million.
- Demand for houses is so hot that a third of new listings go under contract in less than a week.
On a sunny weekend in the Pico Rivera suburb of Los Angeles, more than 75 people lined up along Lindsey Ave for a chance to view a three-bed, two-bath home that had just listed for $575,000.
"It's like that Hungry Hungry Hippo game in the 1980s, except there's only one ball," real estate expert Logan Mohtashami told Insider. "The sheer panic of needing somewhere to live is hitting everyone."
—Logan Mohtashami (@LoganMohtashami) March 13, 2022
Mohtashami, a former mortgage broker and lead analyst for HousingWire, says lines like the one on Lindsey Ave or the frenzy for a home in North Carolina are indicative of an inventory crisis unfolding across the US.
US housing inventory had been declining slowly from its 2014 peak, until the pandemic kicked the market into overdrive bringing the number of monthly active listings from about 1 million two years ago to just 376,000 in February, according to the National Association of Realtors.
"By the end of summer of 2020, I was like, 'Oh god here it comes. Here's the nightmare scenario,'" Mohtashami said. "Now that we're in 2022, people have finally come to the realization that is a full-fledged national inventory crisis."
Meanwhile, with fewer homes on the market, there are now more real estate agents hoping to make a deal.
Since the start of the pandemic, the number of new real estate agents has grown by 156,000 to over 1.5 million, according to the NAR, an increase that is nearly 60% larger than the two years before the pandemic.
The combination of low upfront costs of a few thousand dollars and roaring market was attractive to new agents like Carolyn Lee, who told The New York Times she found herself battling a January snowstorm with clients to get an early look at a new listing. She still had to beat six other offers.
"You have to be willing to do what it takes, especially right now," she said.
Early numbers from real estate data-tracking firm Altos Research suggest that inventory could be on an upswing ahead of the usual busy summer selling season, but that same data indicates median listing prices are on the cusp of topping $400,000 for the first time ever.
The Altos data also shows that houses are seeing fewer price cuts than ever, and that one in three go under contract in less than a week.
This diminishing inventory is also feeding a self-reinforcing cycle, since existing homeowners are reluctant to sell when there's nothing for them to buy.
Even so, it's not a situation that can be solved by simply building more housing supply, Mohtashami argues, pointing to the construction boom that began in the mid 1990's and still saw rising prices. The entire financial architecture of the US favors keeping home prices up, he says.
Somewhat counterintuitively, inventory will only start to improve if demand begins to dial back a bit, probably due to higher borrowing costs from the Federal Reserve raising interest rates.
"We need total inventory levels to get back to 1.52 million or 1.93 million just to be back to a normal market," Mohtashami said. "Until that happens this is a savagely unhealthy housing market."