Many Believe the Number of New Construction and Existing Homes for Sale have Exploded. The Reality is Quite a Bit Different.

If you have your hand in any part of the real estate world, you’ll see articles or listen to podcasts with explosive headlines that may lead to the perception that new home inventory and expanding existing home inventory is at its highest level since the great recession in 2008 and that home prices are going to crash.  It’s been a long time since new construction and existing new home inventories were on the increase.

Please know that a lot of what you see and hear on line is nothing more than "clickbait" to get you to a specific website or webpage.  The reality of the real estate market may be a bit elusive unless you look at the data and do a little digging.

Changing Perspective

Nationwide, Home Inventories Have Reached its Highest Point Since Right Before the Great Recession.  But there’s not an explosion of new homes coming on the market or new construction.  Interestingly, in Southern California, although Homes for Sale have not passed pre or post-pandemic levels...yet.. They have not however, reached that pinnacle high point just before the recession.  Some say we are still 1-2 years away from that level of homes for sale.      

To get a better grasp of how the housing market is trending, you’ll want to compare inventory today versus the surplus we saw back in 2008.

When you tally up the numbers, it’s pretty clear that overall supply looks quite a bit different today than it did at the beginning of the “Great Recession”.  The difference is, the upward direction this time is a good thing, not a sign of doom and gloom caused by nefarious lending standards.

Home Builders Are Still Recovering from What Happened 15 Years Ago

Although it doesn’t grab headlines or clicks, during the great recession, new home construction basically stopped  - as did a number of other real estate related segments.  For going on 15-plus years, home builders didn’t produce enough new homes to keep up with the growing demand.  This was a major contributing factor in the housing shortage we are dealing with today.  And although new residential construction has rebounded, according to Realtor.com, it is lagging behind where we should be and has quite a ways to go (as the graph below indicates).

Even with the growth we’ve seen lately, experts anticipate that it would take about 7.5 years to build enough homes to close the gap created by the great recession – barring any significant downturns in the economy.

The Keyword for the Rest of 2025 in Southern California is STABILITY

Most of Southern California is experiencing an increase in inventory of existing homes and new construction.  Since all Real Estate is local, some areas may see a slight decrease in the median home prices.  However, the majority of Southern California will continue to experience moderate increases in inventories with slight increases in values depending on location, competition, neighborhood and condition. 

None of this means we are headed for any sort of “housing crash”.  We do however, seem to be squarely in “Stabilization” territory.

If you want to know more about what is going on with builders in Southern California, or how the market will trend on your street, neighborhood, town, city, county or state, let's chat!