Home inventories have fallen in early 2015 as markets have struggled to find a balance between homes for sale and qualified buyers. Home inventory fell in January by 6.7% month over month and 8.7% year over year.

Although obvious on the surface, the major problem causing a lack of homes for sale is that sellers have yet to put their homes up for sale. Many home owners have watched their markets increase, with the expectation that their home will sell higher the longer they wait. In many cases this will be true. However, in markets like Bozeman, Montana, where there are many willing and able buyers waiting for the right home to come onto the market, a seller who puts up a home in a desirable neighborhood may actually receive multiple offers, allowing them to choose the highest bidder. If seller’s wait, they will inevitably find more competition as more people list their homes, driving the bargaining power back to buyers.

Prices will continue to rise as inventory remains low and so long as competition remains low.

Around the nation, high and rising home prices have kept many buyers from getting involved in real estate. Median home prices have been rising and the median home price in the US in January was $211,000. Bozeman has seen above median home prices for both single-family residences and town homes.

The average family in the US currently earns $63,900 annually. Overall, that family can afford 62.8% of homes. In the third quarter of 2014, that family could only afford 61.8% of homes, so affordability has improved. But as sellers continue to hold back potential inventory, rising prices may affect home affordability negatively.

Ideally, the market will normalize regarding home value growth and buyer affordability. Signs remain positive that the market is recovering but inventories will need to rise to continue the housing market growth.



Source: http://eyeonhousing.org/2015/03/vacancy-and-homeownership-rates-by-state-2014/