The Predictive STR Trends #1925

Why You Should Be Concerned

Inventory is Climbing Back to 2017 Levels

Rising inventory isn’t inherently bad, but if it keeps growing while absorption rates stay low, we risk oversupply. Too many unsold homes can tip the balance toward a buyer’s market—and not in a fun way for sellers.

Absorption Can’t Keep Up

Comparing the absorption index to inventory growth shows a clear mismatch. Homes are hitting the market faster than they’re being sold. If this continues, it could lead to a backlog of unsold properties and increased price pressures.

Economic Headwinds Are Gathering

Inventory isn’t rising in a vacuum. Combine that with higher interest rates and declining consumer confidence, and you’ve got a recipe for cautious buyers. The result? A slower-moving market that could test even seasoned investors.

Will the Market Crash?

Eventually? Sure. Everything does, given enough time.

But is the current data pointing to an imminent crash? No. Here’s why:

This Is the New Normal

The market of the last 2–3 years is likely what we’re settling into. Forget about 2021—it was an anomaly. The goal now is to stabilize somewhere between the highs of the pandemic boom and the modest market of 2017–2018.

The Numbers Don’t Add Up to a Crash

Yes, inventory is rising, interest rates are high, and absorption is low. But these factors alone don’t spell doom. Crashes happen when oversupply meets a failing economy—and while cracks exist, they’re far from catastrophic right now.

What Should You Watch?

Stay sharp. Keep an eye on the key metrics:

• Inventory Levels: Rising, but still manageable for now.

• Absorption Rates: If they dip further, that’s a red flag.

• Median Prices: Holding steady is a good sign; any major drops could indicate trouble.

• Economic Drivers: Interest rates, mortgage defaults, and jobless claims all influence buyer confidence.

Historically, it takes extreme oversupply and a failing economy to spark a real estate crash. Could it happen? Yes. Are we there yet? No.

Seasoned investors should weather this just fine. Those who’ve been operating on thin margins, however, might want to buckle up—it could get bumpy.