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Dwindling Inventory and Insane Bidding Wars

Wednesday, February 16, 2022   /   by Dave Salzman

Dwindling Inventory and Insane Bidding Wars

If you tried to buy a house in 2021, you probably found it to be a really frustrating experience, with little inventory to choose from. Bad news: so far 2022 is looking worse. On the latest Odd Lots podcast, we spoke with Mike Simonsen, the Co-Founder and CEO of Altos Research, which gathers all kinds of data on the housing market. The story so far: dwindling inventory and insane bidding wars.

This chart shows how extreme it's gotten. A few years ago at this time, there were about a million single family homes for sale. Now it's less than 300,000 nationally.


There are several reasons for the decline, which Mike gets into. One of the interesting factors is that these days, when someone moves and buys a new home, it's becoming less than automatic that they sell their own home. People have cheap mortgage costs and a cheap cost of carry, and if home price appreciation is expected to be decent and the housing market is robust, then, increasingly, a lot of people just decide to become landlords.

In general it makes a lot of sense. Housing has been an incredible investment that can be cheaply financed. Obviously a lot of people need to sell their old home in order to make the down payment on a new home. But if they don't need to do that, why reduce your exposure to the housing market? As such, the number of homes that are actually for sale just keeps going down.

Anyway, there's plenty of other factors, but this is one driver contributing to the vanishing number of homes for sales.


Weisenthal, Joe. “Five Things You Need to Know to Start Your Day.” Bloomberg.com, Bloomberg, 20 Jan. 2022, https://www.bloomberg.com/news/newsletters/2022-01-20/five-things-you-need-to-know-to-start-your-day.

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