The Housing Market Is Ending 2024 with 'Stale' Supply

As the year 2024 draws to a close, the housing market finds itself grappling with an unexpected challenge: a growing inventory of 'tale' homes. These are properties that have been on the market for at least 60 days without selling, a trend that has been steadily increasing since the beginning of the year. According to Redfin's unsold inventory report for November, a staggering 54.5% of home listings remained unsold for at least 60 days, the highest share since November 2019. This increase in stale inventory has raised concerns among industry experts and homeowners alike, as it signals a potential slowdown in the housing market.

The primary culprit behind this trend is the unrealistic pricing expectations of sellers. Many homeowners are reluctant to lower their asking prices, even as market conditions change and demand wanes. This has led to a glut of overpriced homes that are less attractive to potential buyers. Redfin Premier agent Meme Loggins succinctly summarized the issue: "A lot of listings on the market are either stale or uninhabitable. I explain to sellers that their house will sit on the market if it’s not fairly priced. Homes that are priced well and in good condition are flying off the market in three to five days, but homes that are overpriced can sit for over three months."



Another factor contributing to the growth of stale inventory is the shift in renter behavior, with more renters choosing to stay in their homes longer. According to Redfin, 33.6% of U.S. renters are staying in their rental homes for at least five years, compared to 28.4% a decade ago. This trend, coupled with the fact that renter household growth is outpacing that of homeowners, suggests a shift in market dynamics that could influence new housing construction and affordability.

The increasing duration of renter tenure has several implications for the housing market. First, it could lead to a decrease in the demand for new housing construction, as fewer renters are moving out and looking for new accommodations. This could result in a slower turnover of the existing housing stock, potentially leading to an older and less updated inventory. Additionally, as renters choose to avoid rising homeownership costs and moving expenses, they may be more likely to tolerate older or less well-maintained properties, further contributing to the aging of the housing stock.

The growth of renter tenure could also impact the affordability of housing for first-time buyers. As renters stay in their homes longer, it could lead to a decrease in available rental units, potentially driving up rental prices. This increase in rental costs could make it more difficult for first-time buyers to save for a down payment, as they would have less disposable income to set aside for homeownership. Additionally, if renters are staying in their homes longer, it could lead to a decrease in the number of starter homes available for first-time buyers, further exacerbating affordability challenges.

In conclusion, the housing market is ending 2024 with a growing inventory of 'tale' homes, a trend driven by unrealistic seller expectations and a shift in renter behavior. This increase in stale inventory has raised concerns about the health of the housing market and its potential impact on new housing construction and affordability. As the market enters 2025, it will be crucial for homeowners, real estate agents, and policymakers to address these challenges and work towards a more balanced and sustainable housing market.