Low Inventory Remains A Problem

The National Association of Realtors reports that U.S> home sales increased by 15.4 percent on November over 2015 and is now the highest level in nearly a decade. Analysts agree that the strong sales were due to a robust job market and the realization that interest rates were likely to rise (as they subsequently did).

However, the big worry in the real estate market remains the low housing supply both nationwide but particularly in the Bay Area. Currently in the U.S. there is a 4.0 month supply of inventory (MSI) while in the nine county region of the Bay Area the MSI is much lower at 1.9.

Homebuilders are confident about the housing market going forward due primarily to the healthy economy and job market but also point to costly new regulations, a shortage of construction workers, and a general over-all caution from the most recent recession as limiting factors in 2017.

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