Even though winter isn’t typically the peak season for home searches, this key question is top of mind for homebuyers right now:
Why is it so hard to find a house to buy?
Simply put, at the moment sellers are in the catbird seat; 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.
Low inventory in the housing market isn’t new, and 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 buyers at this hour.
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.
The Pandemic's Impact on the Housing Market
Just about two years ago - in late winter 2020 - the pandemic hit. This 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 nationwide.
In turn, 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 This All Mean, for the Buyer?
Low inventory can certainly be a challenge. Buyers want to find the home of their dreams, and 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 some 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. Buyers are advised not to postpone plans because they’re waiting for those additional houses to hit the market.
It is recommended that buyers remain with their search and persevere through today’s low inventory. With an excellent real estate professional by their side, they can trust that their perfect home will show up, with patience and focus.
The why for finding a home ought to be the driving force behind the search. Sharing goals and visions with one’s agent with clarity about priorities are excellent steps. A trusted advisor provides invaluable support as buyers navigate today’s low housing supply to find the home of their dreams.
Connect with the Dennis Hartley Team to learn what’s happening in our area, and why it’s still worthwhile to prioritize your home search today.
Lead foto by LoggaWiggler on Pixabay