The Housing Shortage: Why We Need Sellers
Yes, the rumors are true; we’re living in a record-breaking seller’s market and there’s a housing shortage. And if you’re thinking about selling, we need you! Covid shook things up, leaving us with low inventory and increasing what a qualified buyer is willing to pay for a home.
Nationally, homes priced above $250,000 have been mainly driving home sales for the last several months. However, even homes priced between $500,000 and $1 million are being affected by the shortage.
Why Is Inventory So Low?
In 2020 the number of people working from home skyrocketed thanks to the pandemic. Ninety-two percent of people say they will likely work from home at least once a week in the future. This is bringing more and more people to the suburbs looking for permanent and functional homes.
While the demand for inventory is excellent news for sellers, buyers are having difficulty. Homebuyers are paying the price for the housing shortage, and it’s intensified due to several things, including but not limited to the following:
- Covid lockdowns forced individuals to work and learn remotely, keeping people from wanting to leave their homes.
- A population that’s living longer, which prevents homes from being recycled.
- Millennials are hitting the homebuying age over the next three years, creating a need for more housing.
- Interest rates decreased and brought out a record number of buyers in 2020, snatching up available housing.
- Historically low mortgage rates
- Local, state, and federal mandates and restrictions increased in 2020, causing joblessness and decreased pay. This also kept people in their current homes unable to sell because they won’t be qualified to buy.
- Investors hit the market in droves buying up record amounts of property.
- Population shifts to states like Texas, Utah, Florida, and Arizona, creating a housing demand.
- Historically, high lumber prices have significantly reduced the number of new homes built, and existing homes renovated alongside a nationwide lumber shortage.
- Also contributing to the decrease in new home builds is a lack of factory workers producing building materials and workers to build the houses.
After eight months of the above happening, the consequences of low inventory finally caught up with the housing market in February, resulting in historically low inventory across the country, and low inventory means high competition.
What Does This Mean For Buyers?
Qualified buyers appear to be more than willing to pay extra to win the bidding wars. They’re even eliminating contingencies to make their offers more attractive. Potential buyers who may not have the same qualifications might need to enlarge their geographic search area in today’s market.
The Houston housing inventory supply is currently at 1.4 months; this means that if they completely stopped listing houses, they would sell all of the current inventory within 1.4 months. A 6 month supply is considered a balanced market, meaning the supply would last six months if no more houses came onto the market. If a larger inventory pool were currently available to select from – ideally a five to six-month supply – more buyers would have the opportunity to purchase property at an affordable price.
The best thing that a buyer can do for themselves right now is prepare to be in the best position to put an offer on a house. Also, make sure that you have a Realtor® who is excellent at negotiations and winning multiple offer situations, who is professional and has a good rapport with other agents.
How Long Will The Housing Shortage Last?
The hope is that as interest rates climb, homes will spend more days on the market, resulting in more inventory. But it will be a waiting game to see if interest rates get high enough to affect the market before more pricing damage is done.
However, economists are currently predicting that homebuilders may not achieve a supply and demand balance for six years. And the brunt of that work will fall on the shoulders of new home construction builders.
How Living Houston Can Help
If you’ve been thinking about selling, now’s the time. This market won’t last forever, and once the market bubble bursts, you may find yourself wishing you’d gone through with the sale of your home when you could have gotten the most for your largest asset. So the time to sell is now, but it’s also time to buy because interest rates and prices will continue to rise. As prices go up and begin to inflate at the end of the year, purchasing power will decline. If you’re on the fence deciding if selling or buying is suitable for you in the current market, contact Living Houston for a consultation and get some clarification on the subject and how best to move forward.