By Mike LaFirenza
In Joliet, total housing inventory increased by 78.8% between Q3 2021 and Q3 2022. Among all midsize U.S. cities, Joliet had the 14th largest increase in housing inventory.
The COVID-19 pandemic brought dramatic changes to the U.S. housing market. At the onset of the pandemic, housing sales and new construction initially stalled due to economic uncertainty. But as the U.S. entered survival mode and the federal funds rate was lowered drastically, home buying and building resumed. The popularization and widespread acceptance of remote work not only incentivized Americans to prioritize their space (and home offices) but allowed individuals to seek housing outside of their typical boundaries, increasing demand and contributing to inflated house prices.
Although the federal funds rate was initially lowered to support spending in other areas to aid a suffering economy, this dip only lasted so long. After a 1.5% net decrease in 2020 and no rate changes in 2021, 2022 experienced its largest hike in over 30 years, with an overall net increase of 4.25%. In efforts to control raging inflation that began in 2021 and continued through 2022, the Federal Reserve initiated a series of the most aggressive rate hikes in decades. First, the Federal Reserve increased interest rates by a quarter point in March 2022, followed by a half point in May. June received a hike of three-quarters of a percentage point, which was repeated in July, September, and November, before a final half point in December.
While the federal funds rate doesn’t directly control interest rates on home loans, it influences how much it costs banks to borrow money from each other. This in turn affects mortgage rates—helping to explain their dramatic increase over the past year. By making borrowing more expensive, fewer people can participate, causing a ripple effect in the housing market.
While high mortgage rates are a significant barrier for potential home buyers, they do their part to increase housing inventory. The low interest rates and high demand environment of 2020 and 2021 contributed to the significant decline of housing inventory between January 2020 and December 2021, which dropped from nearly 1.3 million to just over 650,000 homes, according to data from Redfin. This aligns with a larger trend over the past two decades: from May 2012 to January 2022, U.S. housing inventory dropped from 2,194,184 available homes to 629,904—a net decrease of over 1.5 million.
However, with rising mortgage rates and an increase in home construction during COVID, U.S. housing inventory is finally showing signs of growth after years of steady decline. From January 2022 to October 2022, U.S. housing inventory increased from 629,904 to 1,173,927 available homes. While housing inventory is still below pre-pandemic levels (in March 2020, housing inventory stood at 1,365,211), this recent growth is promising for future homebuyers seeking lower asking prices.
Although housing inventory is increasing throughout the U.S. overall, certain geographic regions have seen faster growth than others. The western U.S. experienced the largest increases in housing inventory from Q3 2021 to Q3 2022. Six states in the western region ranked within the top 10 of all 50 states, with Nevada (+74.7%) topping the charts. Utah and Washington weren’t far behind, experiencing positive changes of 63.0% and 60.8% respectively.
This trend of housing inventory gains in the west applies to cities of all sizes, along with certain cities in states like Florida, Michigan, and Texas, which make attractive places to buy a home due to their growing job markets and affordable costs of living.
To determine the locations with the biggest increases in housing inventory, researchers at Construction Coverage analyzed the latest data from Redfin’s Data Center. The researchers ranked cities by the year-over-year percentage increase in housing inventory. In the event of a tie, the city with the bigger total change in average monthly housing inventory was ranked higher.
In Joliet, total housing inventory increased by 78.8% between Q3 2021 and Q3 2022. Among all midsize U.S. cities, Joliet had the 14th largest increase in housing inventory. Here is a summary of the data for Joliet, IL:
Percentage change in housing inventory: +78.8%
Total change in housing inventory: +209
Months’ supply (Q3 2022): 2.2
Months’ supply (Q3 2021): 1.0
For reference, here are the statistics for the entire United States:
Percentage change in housing inventory: +20.9%
Total change in housing inventory: +201,939
Months’ supply (Q3 2022): 2.2
Months’ supply (Q3 2021): 1.5
For more information, a detailed methodology, and complete results, you can find the original report on Construction Coverage’s website: https://constructioncoverage.com/research/cities-with-the-biggest-increase-in-housing-inventory-2023.
mike@latticenewswire.com