By Adam Pagnucco.
Last November, I published real estate data provided by Silver Spring broker Liz Brent showing that declining inventories of homes for sale were resulting in soaring home prices. Well, Brent has provided an update and the latest data is eye-opening.
A note on the data. As an agent, Brent has access to MLS (multiple listing service) information used by real estate agents to research home markets. In addition to median home price and other measures, the data includes months’ supply of inventory (MSI), which is “the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.” In other words, MSI is a measure of the tightness of housing supply. Historically, when MSI is below 4-5 months, home prices tend to rise.
In 2022, MoCo’s MSI was 0.9, its lowest level in many years. And predictably, home prices are exploding. The chart below was produced by Brent and shows supply getting tighter and prices going up year after year.
This is a basic story of supply and demand, folks. If demand is steady and supply dries up, prices will soar. That’s what has been happening in our housing market since the Great Recession. And nothing the county has done has been sufficient to stop it.
This reminds me of something I recently told my 13-year-old son, who was born in this county. I said, “I have a plan for how you can own a home here. Here’s the plan. I die. You get my house.”
I was half-joking, but when I see data like this, I realize how serious my “plan” may be.
So what are the implications if the only two paths to home ownership in this county are great wealth or inheritance? Well, here is one. The charts below show home ownership and median household income by race in MoCo as of 2021 from the U.S. Census Bureau’s American Community Survey.
This data makes it obvious that it’s easier for Whites and, to a lesser extent, Asians to access housing through inheritance and wealth than it is for Blacks and Latinos. That means in addition to the obvious economic consequences, a constrained housing supply exacerbates inequity in the county. Sky-high home prices may also force prospective home owners into the rental market, thereby pushing up rents.
Folks, this information shows how hard it is to buy a home here and how much worse it is getting. The county has taken some positive steps on housing, particularly on land use regulations, but it also regularly interferes in the economics of development which has contributed to a nose dive in residential building permits. Now we are confronting a home market in which many, MANY people are priced out.
This is a hard problem to fix. But at the very least, we should not make it worse. There are a variety of housing proposals under consideration by county leaders – some good, some bad and some mixed. Let’s keep trying to make progress. But for the good of our community, any proposals that kill the economics of housing supply must be defeated.