In my last newsletter I discussed the sharp drop in available housing inventory and how it has been leading to an increase in the average sale price of residential properties. The chart below is of Pinellas County and reiterates this fact. Year over year the total number of sales has increased 16% while the current inventory of homes has decreased almost 42%. The result has been a modest increase in prices of 3.5%. As depicted in the chart below, the pace of declining inventory and increasing sale price has accelerated in the last six months. Since the low in February 2011 the average sale price in Pinellas County has increased 22%. Is this the sign that the housing market has recovered or is there something else at play?
It is pretty obvious that the decline in inventory has led directly to this increase, but what about the “Shadow Inventory” we hear so much about? (more…)