2016 – A Historic Year in Real Estate
The landscape of residential housing changed in the fall of 2008. The financial crisis which occurred during this time was finally being felt in the middle of the country, not just on the east and west coast states. Tax credits in 2009 and 2010 were a national attempt to correct the bursting housing bubble. Inventory remained high through the middle of 2011, then inventory was reduced drastically in the latter half of 2011 and on into 2012.
Months of inventory approached more normal levels in the summer of 2012 and then felt the effects of seasonality where months of inventory is lower in spring and summer and higher during the fall and winter. In the spring of 2015 the local market entered a full blown “seller’s market” which is less than 5.5 months of inventory.
The graph below shows a recap of the housing inventory over the last decade. During the spring/summer season of each year we normally see a rise in inventory and a fall during the fall/winter months. This is what creates the mountains and valleys you see in the graph below. However, notice that there is no significant bump in the year 2016. The inventory of residential homes for sale have remained at extremely low levels throughout the entire year, and the months of inventory has reached lows not seen in decades.
It is natural to think the lack in inventory would cause a decrease in sales. However, take a look at the following graphs. In the Greater Louisville, Southern Indiana, and Elizabethtown markets, 2016 has been the best year for sales in a decade!
Note: All three local markets experienced abnormal sales bumps in 2010 due to tax credits offered buyers to stimulate the housing economy that year.