sIf you are in the market for a new house, you probably noticed that the selection of homes for sale is currently very limited. As we start 2013, the inventory of Columbus homes for sale is at a 10 year low. And, it seems to be decreasing more every month.

The latest Columbus housing stats for 2012 paint a dire picture. While sales jumped by 15.5% in December 2012, the total inventory of homes for sale is down to 9,252, 16.6% less than a year ago. That’s a far cry from the more than 16,000 listing we saw at the height of the housing boom in 2005.

Challenge of selling your home in a sellers market

Why is the Inventory at a 10 Year Low?

You are probably wondering, why the inventory is low? Why are home owners not selling? How will this steady decline impact the overall real estate market.

In a recent article the Wall Street Journal gives 6 reasons why the inventory keeps declining.

The major reason is low home values. Many home owners are under water with their mortgages. They owe more than their house is worth and can’t sell. Others just have a little equity left in their homes, not enough to trade-up and use the equity as the down payment for a more expensive home.  And then there are people that hold off, just because they don’t want to sell at the bottom of the market.

Other reasons for the declining inventory include the lower number of foreclosures filed by banks.  As a result fewer REOs and HUD homes are listed for sale. Many Investment funds are buying up REOs and converting the bank-owned inventory into rental properties.

Finally, there are no new-builds. Builders still lack confidence in the market. They got burned during the housing bust and are very reluctant to invest in new subdivisions without buyers knocking on their doors.

The Effects of a Declining Inventory

A declining inventory will bolster home values.

You can see increasing values and fewer days on market (DOM) all over the country. The average sales price of Columbus homes has already increased by 7.5% (to $167,459) in 2012.

Columbus usually get the price first, then the suburbs receive them. A decline in distress sales, such as short sales, REOs, HUD homes, reduced the number of cheap homes hitting the market.

In 2012, 30.8% of all home sales were categorized as lender mediated or distress sales, down from 34.8% in 2011. With the average price of distress sales around $65,000, the lower share of foreclosure sales has improved home values in Columbus.

In the suburbs where lender mediated sales are less common, the average sales price did not increase in 2012.

In Dublin the average sales price even dropped by 5.7% (to $320,418), while the number of sales went up by 31%.

Only 6.8% of current Dublin listings are lender mediated.

How to Benefit from this Market?

For buyers I would recommend that you take advantage of the low prices of traditional listings and don’t let bidding wars make the wrong decision for you. Finding a great home may be frustrating at times.

I can help you and make your home search easier for you. Even in this brewing sellers market there are gems! I can find them for you. Just call me at (614) 975-9650.