One question that’s top of mind if you’re thinking about making a move today is: Why is it so hard to find a house to buy? And while it may be tempting to wait it out until you have more options, that’s probably not the best strategy. Here’s why.
There aren’t enough homes available for sale, but that shortage isn’t just a today problem. It’s been a challenge for years. Let’s take a look at some of the long-term and short-term factors that have contributed to this limited supply.
Underbuilding Is a Long-Standing Problem
One of the big reasons inventory is low is because builders haven’t been building enough homes in recent years. The graph below shows new construction for single-family homes over the past five decades, including the long-term average for housing units completed:
For 14 straight years, builders didn’t construct enough homes to meet the historical average (shown in red). That underbuilding created a significant inventory deficit. And while new home construction is back on track and meeting the historical average right now, the long-term inventory problem isn’t going to be solved overnight.
Today’s Mortgage Rates Create a Lock-In Effect
There are also a few factors at play in today’s market adding to the inventory challenge. The first is the mortgage rate lock-in effect. Basically, some homeowners are reluctant to sell because of where mortgage rates are right now. They don’t want to move and take on a rate that’s higher than the one they have on their current home. The chart below helps illustrate just how many homeowners may find themselves in this situation:
Those homeowners need to remember their needs may matter just as much as the financial aspects of their move.
Misinformation in the Media Is Creating Unnecessary Fear
Another thing that’s limiting inventory right now is the fear that’s been created by the media. You’ve likely seen the negative headlines calling for a housing crash, or the ones saying home prices would fall by 20%. While neither of those things happened, the stories may have dinged your confidence enough for you to think it’s better to hold off and wait for things to calm down. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, says:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”
That’s further limiting inventory because people who would make a move otherwise now feel hesitant to do so. But the market isn’t doom and gloom, even if the headlines are. An agent can help you separate fact from fiction.
How This Impacts You
If you’re wondering how today’s low inventory affects you, it depends on if you’re selling or buying a home, or both.
- For buyers: A limited number of homes for sale means you’ll want to seriously consider all of your options, including various areas and housing types. A skilled professional will help you explore all of what’s available and find the home that best fits your needs. They can even coach you through casting a broader net if you need to expand your search.
- For sellers: Today’s low inventory actually offers incredible benefits because your house will stand out. A real estate agent can walk you through why it’s especially worthwhile to sell with these conditions. And since many sellers are also buyers, that agent is also an essential resource to help you stay up to date on the latest homes available for sale in your area so you can find your next dream home.
Bottom Line
The low supply of homes for sale isn’t a new challenge. There are a number of long-term and short-term factors leading to the current inventory deficit. If you’re looking to make a move, let’s connect. That way you’ll have an expert on your side to explain how this impacts you and what’s happening with housing inventory in our area.
To view original article, visit Keeping Current Matters.
A Look at Housing Supply and What It Means for Sellers
It’s not too late to take advantage of today’s sellers’ market and use rising equity and low interest rates to make your next move.
3 Charts That Show This Isn’t a Housing Bubble
With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006.
Today’s Real Estate Market Explained Through 4 Key Trends
The current real estate market is one for the record books with the exact mix of conditions that create opportunities for buyers & sellers.
Remote Work Has Changed Our Home Needs. Is It Time for Your Home To Change, Too?
Working from home gives you more flexibility and more options.
What You Should Do Before Interest Rates Rise
Whether you’re looking to make a move up or downsize to a home that better suits your needs, now is the time!
Why This Isn’t Your Typical Summer Housing Market
As the economy rebounds and life is returning to normal, the real estate market is expected to have an unusually strong summer.