I received this question via email from a reader a few weeks ago:
I’ve got to ask this because it seems nobody else is asking. We know that just 3-4 years ago there was a surplus of homes on the market. We also know that in the last 3-4 years home sales have remained relatively low.
So where did all those homes for sale go? Did they all just magically vanish because they didn’t sell? Where did all the inventory go?
Here’s my theory: In a typical market on average, about half of all homeowners in the United States move every five to seven years. That’s a lot of inventory that comes on the market fairly frequently.
It’s 2012. Five to seven years ago was 2005 to 2007 — Right at the peak of the housing bubble when home values were 20% to 30% higher than they are today.
In short, many of the people who would be sellers in today’s market are “priced in” to their homes and unable to sell.