One key question that’s top of mind for homebuyers this year
is: why is it so hard to find a house to buy? The truth is, we’re in the ultimate
sellers’ market, so real estate is ultra-competitive for buyers right now. The
number of buyers searching for a home greatly outweighs how many homes are
available for sale.
While low inventory in the housing market isn’t new, it’s a
challenge that continues to grow over time. Here’s a look at two reasons why
today’s housing supply is low and what that means for you.
1. New Home Construction Fell Behind for Several Years
The graph below shows new home construction for
single-family homes over the past five decades, including the long-term average
for housing units completed. Builders exceeded that average during the housing
bubble (shown in red on the graph). The result was an oversupply of homes on
the market, so home values declined. That was one of the factors that led to
the housing crash back in 2008.
Since then, the level of new home construction has fallen
off. For the last 13 straight years, builders haven’t been able to construct
enough homes to meet the historical average (as illustrated in green on the
graph). That underbuilding left us with a multi-year inventory deficit going
into the pandemic.
2. The Pandemic’s Impact on the Housing Market
Then, when the pandemic hit, it fueled a renewed
appreciation and focus on the meaning of home. Having a safe space to live,
work, school, and exercise became even more important for Americans throughout
the country. So, as mortgage rates dropped to at or below 3%, buyers eagerly
entered the market looking to capitalize on those low rates to secure a home
that would fulfill their changing needs. At the same time, sellers hesitated to
put their houses on the market as concerns about the pandemic mounted.
The result? The number of homes available for sale dropped
even further. A recent article from realtor.com explains:
“Last month, the number of home listings dropped 26.8%
compared with the same time a year earlier. This meant there were about 177,000
fewer homes listed in what’s already typically a slower month due to the
holidays and colder weather. . . .”
What Does All of This Mean for You?
For a buyer, low inventory can be a challenge. You want to
find the home of your dreams, and you don’t want to settle. But what if there
just aren’t that many homes to choose from?
There is some good news. Experts are projecting more homes
will soon become available thanks to sellers re-entering the market. Danielle
Hale, Chief Economist at realtor.com, shares this hope, but offers perspective:
“We expect that we’ll start to see a turnaround and
inventory will stabilize and start to go up a little bit in 2022. . . . But
that means we’re looking at inventory levels of roughly half of what we saw
before the pandemic. For buyers, the market is likely to continue to move fast.
If you see a home you like, you want to jump on it right away.”
Basically, inventory is still low, even though more homes
are coming. But you shouldn’t put your plans on hold because you’re waiting for
those additional houses to hit the market.
Instead, stick with your search and persevere through today’s low
inventory. You can find your next home if you’re patient and focused.
Remember your goals and why finding a home is so important.
Those things should be the driving force behind your search. Share them with
your agent and be clear about your priorities. Your trusted advisor is your
greatest support as you navigate today’s low housing supply to find the home of
your dreams.
Bottom Line
If you’re planning to buy this year, the key to success will
be patience given today’s low inventory. Let’s connect to discuss what’s
happening in our area, what homes are available, and why it’s still worthwhile
to prioritize your home search today.
Source: Real Estate with Keeping Current Matters
