We have some news about the current real estate market to share with you. The market is expected to remain strong throughout 2021. According to market analysts mortgage rates that reached unprecedented lows last year, will continue to remain low throughout the new year. One cloud, however, continues to hover over the housing market. There just aren’t enough homes for sale to meet demand.
A January report by the National Association of Realtors (NAR) on existing home sales addresses the all-time low inventory of homes.
“Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3.0-month figure recorded in December 2019. NAR first began tracking the single-family home supply in 1982.”
This means that if no new homes come up for sale and buyers keep buying like they are now, theoretically there would be no homes left for sale in less than 2 months! This is the first time this is true since at least 1982.
This graph from Keeping Current Matters puts these numbers in context.
What if you are the buyer in this low inventory market?
Whenever we have a situation where supply is unable to meet the demand, it presents multiple challenges for the buyer. Here are my tips for home buyers when housing inventory is low:
- Make sure you’re pre-approved before even thinking about looking at a home. Without this approval, your offer is meaningless.
- Find a knowledgeable, experienced, well-connected real estate agent to work with. If you don’t have an agent to represent you, please contact us and we’ll refer you to someone qualified who will work tirelessly to find you a home. Oftentimes, a well-connected agent will learn of new listings from other agents or their own network, even before homes hit the MLS.
- Be prepared to compromise on the features you desire in a home. Decide on essential elements you require in a home and focus on those things.
- Your down payment is a big part of your budget. Make sure you and your lender have explored all the costs associated with buying and moving so that your comfortable down payment figure is realistic. Also, since there is so much demand for homes, you may choose to pay the above list price. Keep that in mind so that you focus your time and energy on shopping for homes at the right price point.
What if you are a seller in this low inventory market?
If you are selling your home in this current market, you hold all the cards. You are in a position to negotiate the best possible terms – whether it’s the price, moving date, or repairs. You may even find yourself in a bidding war with multiple buyers.
Negotiations with two or more buyers can be tricky, so don’t underestimate the value of having a seasoned real estate agent by your side. If you are considering selling your home in this current market and you don’t have an agent, please contact us and I’ll be glad to refer you to a qualified realtor.
Is relief from this low inventory market in sight anytime soon?
Real estate analysts anticipate more homes coming on the market in the spring and summer as the pandemic eases and the vaccine provides some measure of safety for the public.
Another point of good news from analysts relates to new construction in 2021. Lawrence Yun, Chief Economist at NAR, notes:
“To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes…However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
Where do you fit in this low inventory market?
The housing market will remain strong throughout 2021. Where do you fit in? Whether you intend to be a home buyer or seller or you just want to talk about the market, I’m here for a conversation.
As always, if you have been a satisfied customer of ours, we appreciate you referring us to your friends and neighbors.
Thank you and be well.
