You may have heard that the number of homes for sale has recently hit a new high—and that might raise concerns about whether we're heading toward another housing market crash.

But here in North County San Diego, the data tells a different story. Rather than signaling trouble, the increase in inventory is a healthy development. It reflects a market that's gradually returning to more balanced, stable conditions—something we haven’t seen in years.

More options for buyers and less pressure on prices can actually benefit everyone involved. It’s a sign that the local real estate market is becoming more sustainable, not less.

What’s Going on With Inventory?

Based on the latest data from Realtor.com, inventory just hit its highest point since 2020, shown with the white line in the graph below.

But what you need to realize is, at the same time, inventory levels still haven’t returned to pre-pandemic norms (shown in gray):

That means there are more homes for sale now than there have been in quite some time.

And while its true inventory is up significantly compared to where it was over the last few years, the number of homes on the market is still well below typical levels. And that's important context.

Why This Isn’t the Problem A Lot of People Think It Is

Some people hear inventory’s rising and immediately think about 2008. Because back then, inventory spiked just before the market crashed. But today’s situation is very different.

Here’s the key reason why. We don’t have a surplus of homes; we have a deficit to climb out of. What we’re dealing with is a long-term housing shortage – and it’s a big one.

The red bars in the graph below show all the years where housing starts (new builds) didn’t keep up with household formation, going all the way back to 2012. The deeper the bars in the graph, the more the housing deficit grew (see graph below):

And one of the reasons this housing shortage kept growing is because new home construction just didn’t keep up with the number of people who need to buy homes. In fact, the U.S. is actually short millions of homes at this point, and it will take years to overcome that gap. Realtor.com says:

“At a 2024 rate of construction relative to household formations and pent-up demand, it would take 7.5 years to close the housing gap.”

That means in most areas—including here in North County San Diego—there’s no real risk of an oversupply of homes. In fact, it’s quite the opposite. The vast majority of markets are still dealing with a long-standing shortage of available housing.

So while inventory is rising, it’s not cause for concern on a national level. It’s actually helping to bridge the gap that’s been building for years, creating more opportunities for buyers and bringing much-needed balance to the market.

Bottom Line

Don’t let the headlines scare you—rising inventory isn’t a signal of a housing market crash. Instead, it’s a positive step toward a more balanced and stable market.

Here in North County San Diego, we're seeing conditions shift in a healthier direction. At Shafran Realty Group, we’re keeping a close eye on these trends to help you navigate the market with confidence. More homes on the market means more opportunities for buyers and a more sustainable pace for sellers.