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List Prices Have Increased, But Inventory Remains Low

Housing inventory across the country is down. If you're in the real estate business you probably know this. If you aren't, it might as a surprise; there are simply fewer homes going on the market than there were a year ago, or even two years ago.

At the same time, housing prices have not dramatically increased. With fewer homes on the market, list prices should rise as more people compete for a smaller amount of property.

It's a head scratcher. CoreLogic has a theory for one part of the problem. Economists at the Californian company argued price declines are keeping sellers off the market. The company found the supply of homes for sale drops as the number of homeowners who owe more than their houses are worth rises.

The presence of negative equity not only drives foreclosures, reduces the availability of purchase down payments and impedes refinances, but also restricts the ability of owners to list their homes for sale as the demand side of the market improves.

Recently, Movoto Real Estate researched the 50 largest cities in the country to see just how low inventory has dropped in the past year and whether list prices have truly remained flat. What we saw was in cities that have been most affected by low inventories, list prices are starting to creep back up.

Supply, Demand, and Median Price, Oh My!

This is only the tip of iceberg. In nearly all of the top 50 cities, inventories declined. If we believe the data, this indicates that nationally, it should be a sellers market. In other words, more people are competing for a smaller set of houses. With more people  competing for housing, the median list price of each house should, on a theoretical level, increase. In some areas this held true. In others it didn't.

Below are 5 cities with an inventory shortage that have seen an increase in the median list price of houses on the market.

1. Las Vegas, NV
In the past two years Sin City has seen a large increase in the median list price of homes for sale. Compared to a year ago the median list price is up 40%. Compared to 2 years ago the median list price is up 48%. This is a gain of $48,950 in the past year. Maybe it's time to take a gamble on the market.

2. Phoenix, AZ
A year ago the median list price of a house in Phoenix was $109,000. Today the median price is $142,000-up 30%. More telling, the list price is up 18% compared to 2years ago. In the past year the median list price has increased $33,000.

3. Mesa, AZ
America's table has seen serious improvements. Compared to two years ago, the median list price of a house is up 10 percent. Compared to a year ago, home prices are up 25 percent. This means that the list price has increased by $29,373.

4. Miami, FL
Miami's median list price has steadily risen in the past two
years. It's up 30% compared to 2years ago, 23% compared to a year ago, and 14% compared to just 6 months ago.
The current median list price is $245,000. In the past year, Miami list prices have gained $46,000.

5. San Francisco, CA
The Giants' home turf is up 11 percent compared to 2years ago and 19 percent over last. Something we find extraordinarily interesting is the median price range of a San Francisco listing has significantly increased. The current list price is almost a quarter higher than it was 6 months ago.
Overall, in the past two years the median list price has increased by $126,000.

A gradual increase in the price of homes in areas that have been most affected by low inventory. This could be an indicator the housing market has finally pulled out of its slump.

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