How Inventory Impacts Real Estate Deals

Mark Ziemke and I have been tracking inventory relative to asking rents from the beginning of the year, and here are the results: 🔹Chicago has a severe supply shortage of luxury apartments.  🔹 Inventory is down 20% from the start of the year (2649 units available to 2108) 🔹 Asking Rents are up 3.9% year-to-date ($4.21 PSF to $4.37 PSF) The implications: For renters: Limited options + rising prices = urgency. If you find a unit within budget, act fast. For owners and operators: Strong pricing power exists, but the smart play is raising rents strategically to protect occupancy and preserve NOI. For developers: Fundamentals are working in our favor. Demand is outpacing supply, and rent growth will continue to justify new projects — even in today’s capital environment. Chicago’s market fundamentals remain some of the best in the country. Supply constraints, resilient demand, and positive sentiment set up a strong 2025 and beyond. If you want to dive deeper into the numbers or what we’re seeing across our portfolio, let’s connect. #data #chicago #realestate #multifamily #leasing

Whether rising levels of home inventory result in more sales depends on the cause of the increased inventory. Market activity is more likely to pick up when homes are priced right and located in desirable areas, rather than when overpriced homes flood the market. If home prices remain higher, buyers may still hesitate to act unless mortgage rates come down. Affordability, after all, is a paycheck-to-payment calculation, and the numbers need to work, whether that’s achieved through lower home prices, lower mortgage rates, or higher incomes. Nevertheless, our analysis shows that as new listings increase, buyers can more easily find a home better than what they already own and that increases transactions. More in the blog--linked in the comments!

Your weekly real estate market data! Available inventory of unsold homes on the market is now 19% greater than a year ago. We’ve had 18 weeks of growth in New Listings over last year, but that growth may be slowing now. Demand is obviously weak in the face of stubbornly high mortgage rates. Will sellers give up too? Two questions we examine today in the Altos Research real estate market video: 1. How much is too much inventory growth? When do home prices decline as a result? 2. Will sellers get cold feet and keep a cap on inventory like they did last year? [video link follows in the comments] Inventory: - There are 498,000 single family homes on the market in the US.  - That’s a fraction more than last week, and now 19% more than last year at this time.  - Inventory is 107% greater than 2022 when rates started rising. - Higher rates = more inventory - In the Inventory chart below, the red periods are when rates and inventory were rising. YoY inventory growth can be a signal of future home price declines. When is growth too much to sustain prices? New Listings: - There were 52,000 new listings adding to inventory this week. - That’s just 5.7% more than a year ago. - We’ve had 18 weeks of seller growth, but that pace seems to be waning now.  - Last year new sellers shut off in March - see in the New Listings chart below how the light red line turned horizontal in March. Will that happen again? - Also note in the chart how while inventory is rising, we still don’t have a lot of sellers. The gray lines of previous years were much higher. Immediate Sales: - 14,000 immediate sales this week - That’s 18% fewer than the same week last year - Immediate sales shows buyer urgency in the market, and we don’t have much - In the Immediate Sales chart below the smaller the light portion of each bar, the fewer immediate sales, that shows us weakening demand. Price Reductions: - Now 30.5% of the homes on the market have taken a price cut from the original list price.  - That’s up a smidge from last week.  - The trajectory is climbing when a year ago it was still falling.  - In the Price Reductions chart below we’ll want to watch if this year’s line turns higher quickly, like it did in 2022. Does it climb out of the gray “normal” zone quickly? That would indicate potential home sales prices falling in the future. Home Prices: - The median price of single family homes in the US is $429,900. That’s up just a touch for the week. - The median price of the new listings ticked down to $401000.   - There are no signals of price appreciation in the housing market right now with mortgage rates over 7% and still at their highs for the year. - In the Median Home List Price chart below, notice the upslope of both lines at the right end of the chart are not very steep. There is no signal of any strength here.  - Rates would have to fall back into the mid-6s very soon to see home prices move with demand. 

Fresh Realtor.com data for May 2025 shows where inventory is rising the fastest and where price cuts are the most common. Overall, the retail market is continuing to shift from a seller’s market to a buyer’s market. Sellers willing to listen to the market and respond quickly in terms of pricing will likely fare the best in this market. Buyers willing to go against the grain and buy when others are not will likely fare the best in this market. ➡️ Nationwide, active inventory was up 8 percent from the previous month and up 32 percent from a year ago to 1.03 million — the highest since November 2019 ➡️Active inventory was up more than 32 percent from a year ago in 43 percent of markets, including Miami, Houston, Dallas, Atlanta, and Los Angeles ➡️Nationwide, 18 percent of listings had a price cut, up from the previous month and a year ago, and the highest share for an April as far back as the data goes (2017) ➡️More than 18 percent of listings had price cuts in 40 percent of markets, including Miami, Houston, Dallas, Atlanta, Tampa and Phoenix   ➡️Nationwide, median list price was up 2 percent from the previous month but flat from a year ago ➡️The median list price was down annually in 47 percent of markets (438 out of 925), including Miami, Dallas, Atlanta, Tampa, and Phoenix Realtor.com report: https://lnkd.in/gJfK6u5z Inventory heat map: https://lnkd.in/g_QcgY-h Price cut heat map: https://lnkd.in/gXF9CbGG

In case you haven't noticed, there's been a slight shift in the housing market recently. Yes, inventory is still at a record low, and yes, prices still remain high because of it. But, according to data from NAR, there are more homes on the market now than before 2019 nationally (pre-pandemic). And this is significant, for buyers are able to choose a bit more than they could before. Your home, Mr/Ms seller, may not be the only choice in the neighborhood, and therefore, buyers may start to ask for, or “negotiate” for, different things. While this is certainly a welcomed change for buyers, sellers may not be happy. So with that, let’s take a look at that data and find out what things buyers are trying to negotiate, and how sellers can be ready! Ok, first things first. What exactly might a buyer ask for? Let’s take a look: 1. Sale Price - Certainly the most obvious, and the one being asked for more than ever today. Buyers and their agents are far more savvy now than ever before, and they know the comps. Sellers need to be realistic in their sale price or they may have to adjust. Buyers are not looking to pay 100k over ask anymore. 2. Home Repairs - Yes, home inspections are back to some degree. And truthfully, this is a good thing! Home inspections can protect both buyers and sellers from future litigation. Buyers today know they are within their rights to once again ask for fixes to be made. It is up to the seller and the agent as to whether he/she will agree (we always recommend a credit at close instead of a fix, for the record). 3. Closing Costs - Most closing costs run between 2-5% (not including commissions), of the home purchase price, and buyers may choose to ask for some liquidity here. A credit at close can be a good way to help the buyer gain some money at the time of sale, and still get the seller what they want for a net. 4. Home Warranties - These became popular when folks were waiving their inspections. Home warranties can protect the new owner for up to a year if a major system fails, giving him/her some much needed peace of mind. These usually cost a seller between $800-$1200. 5. Closing Date - Buyers may ask for either a faster close, or an extension to the close. Said window is now fully back on the table, as are all the other dates in the offer. So, what’s the bottom line? More inventory brings more choice for the buyers. And this choice gives buyers more power to negotiate during the home buying process. This might not be something sellers are used to, given the state of the market for the past five years. Be ready to listen to your Realtor, and strategize about the best way to find a compromise, and keep the home sale process moving forward. As always, good luck out there folks, stay safe and be kind! #negotiations #homeselling #homebuying

There’s no doubt we’re seeing more velocity in today’s market—but it’s concentrated in smaller deal sizes. The reality is simple: the smaller the deal, the broader the buyer pool. That said, cap rates are still on the move. Why? Because supply continues to outweigh demand—across all categories and all price points. Let’s take a quick snapshot of Dollar Tree to illustrate the trend: - Average deal size: $1.9 million - Current listings: 67 active properties - Absorption rate: Just 3.9 deals closing per month - Months of inventory: ~17 months of supply - Repricing activity: 56% of active listings have been re-priced in the past 60 days - Cap rate shift: Up 88 basis points year-over-year—from 6.88% (2023) to 7.56% (2025 YTD) The takeaway? Even in a more liquid sub-$2 million market, we’re seeing significant inventory buildup and pricing pressure. Until absorption catches up, expect longer hold periods, ongoing repricing, and continued upward movement in cap rates—even for the most recognizable names in the net lease space. Matt Spangenberg Michael Zimmerman Vikaas Patni

The U.S. Housing Market Has Flipped — And That Could Mean Falling Prices 👀 There are now 490,000 more home sellers than buyers in the U.S., a record imbalance that’s expected to push home prices down by the end of the year. Why the shift? 1. High housing costs and economic uncertainty are keeping buyers on the sidelines. 2. The “mortgage rate lock-in” effect is fading, so more homeowners are finally listing their properties. Historically, when sellers outnumber buyers, it signals a slowdown in home price growth. For example, after mortgage rates jumped in 2018, the buyer-seller gap widened, and price growth slowed to its lowest level in six years. Today, that gap is even wider—so a price drop is more than just likely; it’s expected. Florida is leading this trend, with six of the top 10 buyer’s markets where sellers far outpace buyers. What this means: • For sellers: Listing sooner may help you avoid price cuts later. • For buyers: Your negotiating power could strengthen as inventory builds. Buyers! It’s your turn!

A recent analysis comparing active housing inventory between November 2019 and November 2024 reveals fascinating shifts across the country. Here in Colorado, we’ve seen a 10% increase in inventory—a standout statistic compared to many states seeing sharp declines. So, what does this mean for our real estate market? #Buyers: An increase in inventory means more options and less competition compared to other regions. Coupled with stabilizing interest rates heading into 2025, buyers in Colorado may find unique opportunities to enter the market. #Sellers: While inventory has risen, demand remains strong, particularly in areas like Colorado Springs. Sellers who price their homes competitively can still benefit from an active market driven by steady demand. Colorado Springs, recently named the #1 real estate market for 2025 by Realtor.com, exemplifies how increased inventory can balance out demand, creating a more sustainable and dynamic market. With military stability, economic diversification, and a growing reputation as a top destination, Colorado continues to attract buyers across all demographics. Nationally, states in the Midwest face significant inventory shortages, driving intense competition. In contrast, Colorado’s increase signals a market ready to meet the needs of a growing population while maintaining a balanced approach to supply and demand. Colorado’s market remains competitive, dynamic, and full of opportunity. Whether you’re looking to buy or sell, understanding these inventory shifts is key.

Resale inventory in many Sunbelt markets is returning to pre-Covid levels. The resale housing market remains sluggish, affected by the lock-in effect and affordability challenges. While national resale inventory remains low, it is rising, and we’re back to an environment with very different dynamics by market/region. Listings are increasing in most metros, but this trend is more pronounced in areas where inventory has already returned to or exceeded pre-Covid levels. In Austin, for example, May 2024 listings are +80% above the average volume of listings on the market in May from 2013 to 2019. Conversely, listings in many California, Midwest, and Northeast metros remain well below pre-Covid levels, despite rising incrementally. Historically, when inventory rises without a corresponding increase in sales, prices tend to flatten and then drop. We’re starting to see this trend play out in several markets. #jbrec #housing #resalesupply #resalemarket

This new visual from ResiClub shows the metro-by-metro shift in active housing inventory between June 2019 and June 2025, and the divergence is striking. ✅ Markets like Punta Gorda (+105%), Austin (+70%), and Denver (+58%) are now flush with listings, creating opportunities for investors to negotiate better deals. 🚫 Meanwhile, Hartford (-74%), Chicago (-61%), and Rochester (-55%) are experiencing inventory crunches, signaling potential upward pressure on prices, or simply a slowdown in transactions. 💡 For real estate investors and property managers, this is a moment to reassess your acquisition and leasing strategy by region. Are you in a buyer’s market, or holding assets in a tight supply zone? Inventory direction impacts everything from rent pricing power to long-term appreciation. 📍 What are you seeing in your local market?