Economic, Demographic & Market Factors behind
the Historic Decline in Listings for Sale
The plunge in the supply of homes on the market available for purchase by owner-occupier homebuyers has been the single greatest factor in market dynamics since the Great Recession.
Compass Report, March 2024
Market conditions are always determined by the balance between the intensity of buyer demand and the supply of homes for sale.
Soaring interest rates in 2022 led to the "mortgage lock-in" effect, with homeowners holding off from selling, being reluctant to trade their current, very low-interest rate for a much higher rate on a new home purchase. Also, as rents increased, and the tax benefits of owning rental real estate multiplied (with 2017 tax law changes) more would-be sellers began renting out their homes instead of selling.
Over 54% of homeowners are now aged 55 years and above, and as people age, they typically move much less often and sell their homes much less frequently.
Even after interest rates rose in 2022, significantly depressing buyer demand, by 2023, the supply of listings unexpectedly declined as much or more, renewing upward pressure on national home prices.
