Inventory Continues to Rise in Florida, Beyond

In mid-2005, the Phoenix real estate market was experiencing what local brokers call a feeding frenzy.

With the creation of thousands of jobs by the month, a sprawling expansion of new construction, and a record number of adjustable-rate loans being taken out, homes were selling fast and selling high. The atmosphere was also ripe for investors seeking quick returns.

A year later, the city is feeling the effects of a housing hangover.

“I’ve been here 17 years, and I don’t think I’ve ever seen the inventory levels as high as today,” says Robert Rucker of the Arizona Regional Multiple Listing Service.

Phoenix’s housing inventory has, in fact, nearly quadrupled over a 12-month period, from 11,656 in July, 2005, to 42,449 homes last July, according to data provided by ZipRealty.“All these homes bought by investors to try and get a quick return are having to be sold because of the interest rates and the leverage they put into them. [Phoenix] is having to go through some market correction to get that right,” says Pat Lashinsky of ZipRealty.

Slowing home sales in the Florida housing market are also yielding record-high housing inventories. Encouraging the local economy, advising sellers to be competitive in their pricing, and offering incentives to new buyers are some of the remedies brokers and Realtor associations are prescribing.

The factors contributing to a national slowdown in home sales — rising Florida mortgage costs, energy prices, soaring insurance premiums and property taxes — show no sign of letting up in the area. After five consecutive years of double-digit gains, home prices in Miami have driven buyers out of the area by the droves, creating a ballooning effect on inventory.

“Not only has the inventory increased threefold, but the amount of buyers on the market is less than half of what it was last year,” notes Ron Fillion of Ocean International Realty in Miami, who believes the city will retain a high inventory in proportion to its population for at least the next two years.

Whereas meteoric growth was once a given, strategies to maintain stability are already being proposed. In Las Vegas, where the population is set to grow by about 5,000-7,000 residents a month, according to the Greater Las Vegas Association of Realtors (GLVAR), a vibrant economy has already helped stabilize the elevated inventory.

Linda Rheinberger, GLVAR’s president, has advocated several strategies to sellers that could help bring the market back to equilibrium.

“We’re encouraging sellers who aren’t motivated to sell to delist and place a tenant in their property. Prices are always going to be the main consideration in any market,” she said.

For those who are determined to sell, Rheinberger advises them to move out and bring in the lifestyle-fabrication expertise of professional staging firms.

But the most effective selling catalyst, in Rheinberger’s mind, is always the simplest:

At the other end of the spectrum, Boston is already backing down from its peak inventory level of 45,815, recorded in June of this year. Last month, 46 percent of the homes for sale in Boston were reduced — an aggressive selling trend that will likely begin to show its face in more and more in the U.S. national housing market as a whole, even as home loan rates recede.