If you’re considering making a move, one of the first questions that comes to mind is: Why is finding a home so difficult? While it may be tempting for you to wait until there are more options available, this is probably not the best approach. There aren’t nearly enough homes for sale. But this isn’t a problem that only exists today. It’s a problem that has existed for years. Underbuilding is a Long-Standing IssueOne of the main reasons for the low inventory is that builders haven’t built enough homes in the past few years. The graph below shows the new construction of single-family homes in the last five decades. It also includes the long-term housing unit average. This underbuilding led to a significant deficit in inventory. While new home construction has returned to normal and is now meeting the historical average, the inventory problem will not be solved overnight. Mortgage rates today create a lock-in effectThere are a few other factors that play a role in the current market, which add to the inventory problem. The first is a lock-in mortgage rate effect. Some homeowners are reluctant sellers because of the current mortgage rates. The chart below illustrates how many homeowners may find themselves in this situation: The chart below illustrates how many homeowners could find themselves in a similar situation. You’ve probably seen the negative headlines predicting a housing collapse or a 20% drop in home prices. Although neither of these things happened, you may have been sufficiently spooked by the stories to decide to wait until things calm down. Jason Lewris is the Co-Founder and Chief Information Officer at Parcl. He says: “In the absence of reliable, up-to date information, real estate decision are increasingly driven by fear, doubt, and uncertainty.” This further limits inventory because people feel hesitant about making a move. The market is not as bleak as the headlines suggest. A real estate agent can help you sort out fact from fiction. If you’re wondering what this means for you, it depends if you are selling or buying a house, or both. For buyers: With fewer homes available, you will want to consider all your options, such as different areas and housing types. A professional will help you to explore all the options and find a home that fits your needs. They can also help you expand your search by casting a wider net.
Sellers: The low inventory today offers incredible benefits, as your house will standout. You can ask a real estate agent to explain why it is so worthwhile to sell under these conditions. Since many sellers are also buyers this agent can also help you to stay up to speed on the latest homes for sale in your locality so you can find your dream home.
Bottom LineThe lack of homes available for sale is not a new problem. The current inventory deficit is due to a number of factors, both long-term and shorter-term. Connect with a real-estate agent if you’re considering a move. You’ll be able to get expert advice on how this will affect you and what is happening with housing in your area.
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