What Record-Low Housing Inventory Means For You
The real estate market is expected to do pretty darn good in 2021, with mortgage rates that are hovering at historic lows and forecasted to remain favorable throughout the year! I mention one fairly obvious challenge to the housing industry, and that is the lack of homes available for sale.
Last week, the National Association of Realtors (NAR) released their Existing Home Sales Report, which shows that the inventory of homes for sale is currently at an all-time low. The report explains:
“Total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million). 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.”
What Does This Mean for You?
If You’re a Buyer:
Be patient. It may take a little time to find a home you love. Once you do, we suggest preparedness to move forward quickly. Get pre-approved for a mortgage, be prepared to make a competitive offer from the get-go, and understand that a shortage in inventory could mean a bidding war. Calculate just how far you’re willing to go to secure a home and lean on your real estate professional as an expert to carefully guide you. The good news is, more inventory is likely headed to the market soon, 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.”
If You’re a Seller:
Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the positive is... the seller holds a stronger negotiating stance. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to request more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Don’t be unreasonable, but understand you most likely have the upper hand.
The housing market will remain strong throughout 2021. Know what that means for you, whether you’re buying, selling, or doing both. Above all... please reach out to us for answers to questions that you might have!
~Real Advantage Partners team