Housing Inventory Surge: Balancing Risk and Opportunity

Balancing Risk and Opportunity Amid Rising Housing Inventory

The surge in housing inventory across many Southern U.S. states—including Florida, Texas, Georgia, and the Carolinas—is creating both opportunities and risks for real estate investors. As developers rushed to meet pandemic-driven demand, these regions are now grappling with oversupply, resulting in price reductions and increased market instability.

For some buyers, high housing inventory offers the chance to purchase homes at lower prices. However, for long-term investors, holding properties in oversupplied markets introduces significant risks, as falling prices may take years to recover.

In contrast, stable markets like Omaha in Nebraska, where housing inventory growth remains controlled, could provide a more stable path. Here, investors may benefit from potential appreciation and rental income, without the volatility of oversupplied regions.

A Historical Recap: Housing Inventory Trends and Where We Stand Today

To fully understand the impact of today’s housing inventory surge, it’s important to look at how inventory levels have evolved over the past decade. As shown in the FRED housing inventory data, the U.S. market has experienced significant fluctuations in active listings, driven by major economic events.

• Pre-Pandemic Stability (2016–2019):
  During this period, housing inventory hovered around 1.2 million active listings, supporting a stable real estate market with balanced supply and demand.
• Pandemic-Era Decline (2020–2021):
  The onset of COVID-19 disrupted both housing supply and demand, causing housing inventory to drop to record lows—below 600,000 active listings—and fueling a sharp rise in home prices.
• Inventory Recovery (2022–2023):
  As restrictions lifted and new construction picked up, housing inventory climbed toward 900,000 listings, though demand remained high.
• Current Surge (2024):
  By September 2024, housing inventory reached 940,980 active listings. This reflects increased construction in high-growth areas and sellers trying to offload properties in anticipation of market corrections.

Despite the recent surge, housing inventory is still below pre-pandemic levels. This leaves the market at a crossroads: some regions are experiencing price corrections, while others, like Omaha, continue to show stability and potential long-term appreciation.

Opportunities and Risks of Rising Housing Inventory

The increase in housing inventory presents different opportunities and risks depending on the strategy used. Some investors can take advantage of price drops in oversupplied markets, while others may prefer stable regions to secure long-term returns.

Opportunities in Markets with Rising Housing Inventory

In areas with high housing inventory, sellers often lower prices to attract buyers, creating opportunities for specific investment strategies:

• Fix-and-Flip: Investors can purchase properties at a discount, renovate them, and sell them quickly to capitalize on short-term price rebounds.
• BRRRR (Buy, Rehab, Rent, Refinance, Repeat): With the BRRRR Method Investors can buy homes below market value, renovate them, and rent them out while waiting for prices to stabilize.
• Wholesaling: In oversupplied markets, wholesalers can find motivated sellers and assign contracts to other buyers for a quick profit.
• Short-Term Rentals (Airbnb/VRBO): Cheaper properties allow for lower startup costs, and rental demand might still be strong in popular vacation destinations.

While these strategies offer short-term opportunities, they carry risks—housing inventory surges can result in delayed market recoveries, leaving investors exposed.

Why Stable Markets with Balanced Housing Inventory Offer Security

In contrast, stable markets with moderate housing inventory growth—like Omaha—could provide returns without the same volatility. Investors seeking long-term appreciation and rental income benefit from a more predictable market:

• Fractional Real Estate Investing: Fractional ownership allows investors to buy shares in stable, income-producing properties. Benefits could include quarterly rental payouts and potential appreciation without the risks of market timing.
• Buy-and-Hold Strategy: Investors can purchase properties in balanced markets and may benefit from gradual appreciation over time, with potentially less risk of a sudden market correction.
• REITs and Real Estate Crowdfunding: Investing in real estate portfolios through REITs or crowdfunding platforms provides exposure to steady rental income and capital appreciation without high market risks.

The “Time in the Market” Principle: Invest in Long-Term Growth

A fundamental principle of investing is that time in the market matters more than timing the market. Instead of trying to buy properties at the exact bottom of a correction, it’s often wiser to stay invested in markets with consistent, long-term growth. Here’s why:

• Stable markets like Omaha have historically exhibited more consistent pricing trends, reducing the need to attempt to identify market bottoms.
• In more volatile markets, delaying participation in an effort to “time the market” may lead to missed entry opportunities if price movements do not align with expectations.
• Buying shares of individual properties allows investors to gain exposure to real estate without waiting for short-term market corrections, emphasizing long-term participation rather than speculative timing.

Why Fractional Real Estate Investing Is Ideal for Today’s Market

Fractional investing allows you to diversify your portfolio across multiple properties in stable markets without the need to buy a full property.

• Low Barrier to Entry: Start investing with as little as $100 through through the Realbricks platform.
• Omaha’s balanced housing inventory, combined with an average listing sell time of approximately 13 days at the time this article was written, reflects strong market activity and supports the city’s reputation for relative housing market stability.
• Reduced Risk: Fractional ownership allows for diversification, which can minimizes exposure to volatile markets while offering quarterly rental payouts and options for liquidity through secondary markets when available.

Final Thoughts: Choosing Stability Over Speculation

The rise in housing inventory has created a unique landscape, with opportunities and risks depending on the strategy. While oversupplied markets like Florida, Georgia, and the Carolinas offer potential discounts, they also come with greater risks of delayed price recovery. For long-term success, focusing on stable markets like Omaha may offer a more secure path.

With fractional investing through platforms like Realbricks, investors can build wealth gradually, enjoying rental income and property appreciation without the challenges of owning and managing properties directly. The key takeaway? Time is your friend! Time in the market will always be more stable than timing the market. Small good decisions spaced out over a long period of time, can go a long ways when your working to build a long term portfolio.

So why wait? Sign up today and stay informed on real estate trends, and opportunities in the housing market with Realbricks.

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Disclaimer: Investing in real estate involves risks, including the potential loss of capital. This content is for informational purposes only and is not intended as investment advice. Investors should perform their own research and consult with financial professionals before making investment decisions.