If you're considering moving today, one question on your mind is probably: Why is it so difficult to find a house to buy? It might be tempting to wait until you have more options, but that is probably not the best course of action. This is why.
There aren't enough houses for sale, but this issue isn't limited to the present. It has been difficult for years. Let's examine some long-term and short-term elements that have attributed to this restricted supply.
Underbuilding Is a Persistent Issue
The fact that builders haven't been constructing enough homes in recent years is one of the main causes of the low inventory. The graph below depicts new single-family home construction over the previous 50 years, as well as the overall average of completed housing units:
Builders failed to build enough homes for 14 years in a row to meet the historical average (indicated in red). There was a sizable inventory deficit as a result of the underbuilding. Even though the current pace of new home construction is back on track and is at or above the historical average, the long-term inventory issue won't be resolved overnight.
Mortgage Rates Today Build the Lock-In Effect
The challenge of inventory is exacerbated in the current market by a few additional factors. The first is the impact of the mortgage rate lock-in. Basically, the current state of mortgage rates is making some homeowners reluctant to sell. They don't want to leave their current home and take on a rate that is higher than the one they have there. The graph below provides an indication of how many homeowners might experience this:
These homeowners must keep in mind that their needs might be just as important as the financial aspects of their relocation.
Misinformation in the Media Is Creating Unnecessary Fear
The fear that has been spread by the media is another factor that is currently limiting inventory. You've probably seen the depressing headlines predicting a housing crash or a 20% decline in home prices. Although neither of those events occurred, the stories may have shaken your confidence enough for you to believe it would be wiser to wait until things had calmed down. According to Parcl's co-founder and chief data officer, Jason Lewis:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”
People who would otherwise move are now reluctant to do so, which is further limiting inventory. But despite what the headlines might suggest, the market isn't in a bad way. You can distinguish fact from fiction with the aid of an agent.
How This Impacts You
If you're wondering how the current low inventory will impact you, it depends on whether you're buying, selling, or doing both.
For buyers: Because there aren't many homes available, you should carefully weigh all of your options, including different neighborhoods and home types. A knowledgeable expert will assist you in investigating all of your options and locating the residence that best meets your needs. If you need to broaden your search, they can even help you with the casting of a wider net.
For sellers: Due to the low supply, your home will stand out, which has amazing advantages. You can learn why it's especially advantageous to sell under these circumstances by speaking with a real estate agent. Since many sellers are also buyers, that agent is also a crucial tool for assisting you in staying current on the most recent properties that have become available for sale in your neighborhood and locating your ideal next home.
The issue of a lack of available homes for sale is not new. The current inventory deficit is caused by both long-term and short-term factors. Make contact with a real estate agent if you want to move. By doing this, you'll have a professional on your side who can explain how this affects you and how the housing market in your area is faring.