The Silver Lining to Low Housing Inventory

Houses for sale are scarcer than many anticipated. Here are some reasons why and also why its not the end of the world.

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Reasons for a Low Inventory

One of the big reasons inventory is low is because builders haven’t been building enough homes in recent years. 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. 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. 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.?

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Why It’s Good for Home Sellers

Fewer homes on the market mean less competition for your home and more attention from buyers. And buyers in the winter months tend to be more motivated since they are either relocating, downsizing, or simply don’t want to compete with the larger number of spring home buyers so they’ve decided to search for a home now. As the inventory levels go down, demand for homes is going up. Lawrence Yun, chief economist of the National Association of Realtors, said existing-home sales across the country have shown a 20% cumulative increase over the past two years, while prices have gained 18%.

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How Buyers Can Take Advantage

If you’re a fan of nature documentaries (or enjoy hunting yourself), you’ll be familiar with the perfect stillness and incredible patience of hunters before they pounce. You’ll know the lightning-fast moment when they pounce and get their quarry. Buying a property in a time of low housing inventory is a bit like this. You may have to wait longer but be ready to spring into action when you see a good property. However, you still need to check it out thoroughly before you purchase – it’s about starting the conversation instantly, not buying blind. Also, just because properties aren’t listed as “for sale” doesn’t mean the seller won’t consider it. Look at rental properties and expired listings – in the latter case, the seller might be willing to negotiate for a lower price than it was listed at.

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Call Lesa Miller at (812) 360-3863 or go online at https://lesamillerrealestate.com/ where you can read her posts on other social media accounts and websites.