What Covid-19 Means to Inventory in 2020 and Beyond | The Zebra Blog

What Covid-19 Means to Inventory in 2020 and Beyond

Whenever there is any type of crisis in the housing market it is critical to take a step back to assess how the current crisis can affect housing in the future.  Real estate markets are all driven by supply and demand and without inventory house prices can soar and buyers can be left without product to buy.

Most people may be wondering why I am worried about inventory at a time when buyers are sitting on the sidelines waiting for the Covid-19 crisis to pass.  The reason I always worry about inventory is because it is what drives markets everywhere.

There are two very distinct challenges right now for the new construction industry.  The first is that many builders and developers are on hold because their local government has not deemed them an essential service.  While we could argue for a long time about that, as I disagree, the reality is that many projects that should have been built and put up for sale are now sitting dormant.

The second issue is the lending crisis that builders, developers, land purchasers are experiencing.  Many lenders have put new construction loans and jumbo loans on hold.  For many builders and developers this creates a monumental crisis as they sit holding the bag so to speak.  They may have been right in the middle of building when their state put a hold on their ability to finish their product.  For many they are left wondering how they will survive.

This all adds up to more challenges for our inventory.  Any area that has seen double digit price increases is subject to another wave of increases if new construction doesn’t get back on track.   New construction is the cornerstone of our real estate market and we need it to provide the balance of inventory required to manage population growth, migration growth, and area demand.

Wherever you practice real estate it is essential to closely monitor what is happening in your market’s new construction sector.  Everything that gets out of balance will have a negative effect if not corrected.  My personal hope is that lenders loosen up their purse strings and give our builders and developers the funding they need to finish their projects, as now is NOT the time to penalize them for something they had no control over.



By Denise Lones CSP, M.I.R.M., CDEI – The founding partner of The Lones Group, Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.

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2 Responses to “What Covid-19 Means to Inventory in 2020 and Beyond”

  1. your market and State are different than what I see in Kansas City-the Kansas Side. Construction is considered as essential. Also, the Real Estate market is deemed as being essential. Not sure that I totally agree but it is it is. What I am seeing is not only new construction continuing but the number of resale homes that are put on the market continuing at a pretty strong rate. I would say generally we will have 4 homes put on the market while maybe 1/4 th the number of homes go under contract. My feeling is that if this continues we will have have an excess of inventory.
    Just a personal opinion I am not sure we are not risking the spread of the virus by having realtors and buyers touring homes. Our Board has done a great job of implementing guidelines to hopefully eliminate that risk. I would welcom your opinion. Thanks. Dee Grisamore

    • Denise Lones says:

      You are absolutely correct in what you mentioned about inventory in your area. When a market has a good supply of new construction it allows for a more balanced days on market number. It also doesn’t cause inventory shortages because new construction is essential for a healthy market. You are correct that if new listings are four times what sales are then you could surely be facing an inventory overage soon.

      Thanks for taking the time to contribute your excellent content.

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