There has been a great deal of discussion regarding the consistently low housing inventory levels throughout the nation, not just in Texas. Very little, however, has been written about the reasons why inventory levels are staying so low.
Most of our regional metros have less than three months supply (a six month supply is considered equilibrium, with supply and demand balanced). Based on current economic factors, regionally we will continue to see a sellers’ market for 3 or 4 years while the markets play catch up.
The shock of values after the recession in this regional market have caused many sellers to pull back and hunker down. The aforementioned forces feed on each other and further exacerbate the move up problem. Lower inventory begets lower inventory; a downward pressure cycle continues. If one cannot find properties to move up to, they will not sell their current homes.
This same dilemma plagues retirees finding limited or no options for retirement communities in their local area. Retirees in this region have had little to nothing to chose from. Texas was not historically a retirement state. In the last few years, the low cost of living, sunny weather, and low tax burden have captured the national retirement developers’ eye, but it will take some time for the development cycle to catch up. Because of this, housing supply is limited on the top end of the market since seniors are not motivated to sell unless they know exactly where they are going.