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Inventories of houses and condominiums for sale are rising in many parts of the U.S.
Here in the Metro Detroit Area, sales fell nearly 10% in the fourth quarter of 2005 and inventories climbed amid uncertainty about auto-industry layoffs. To stimulate demand, Real Estate One, a Detroit brokerage firm, has been running a companywide "Bonu$ Homes" promotion in which sellers agree to provide $2,000 to $10,000 toward buyer closing costs on purchases made before April 15, 2006.
"The creativity to sell homes is coming back," says Dan Elsea, president of brokerage services at Real Estate One. "We haven't needed it for years."
Economists and real estate experts are watching the inventory numbers closely for signs of whether the housing market is poised for a soft landing...or...something worse. In Detroit, the current inventory of houses and condominiums for sale is up 38% over a year ago.
When inventories are tight, buyers competing for scarce properties bid up prices. As the supply of homes on the market increases, price increases slow and buyers gain negotiating power.
Source: The Wall Street Journal, February 8, 2006
