The number one questions homebuyers are asking this year is: why is it so hard to find a house to buy? We’re all aware, we’re in the ultimate sellers’ market, so real estate is super competitive for buyers right now. In the Seattle market, we’re well under one month of inventory where a healthy market is 4 – 6 months of inventory. Simply said, there are more buyers than sellers.
While low inventory in our local housing market isn’t new, it is still a challenge that continues to grow over time. Here is two reasons why today’s housing inventory is low and what that means for you as a buyer.
1. New Home Construction Fell Behind for Several Years
The National graph below shows new home construction for single-family homes since 1970, including the long-term average for housing units completed. Builders did exceed that average during the housing bubble (shown in red on the graph) which resulted was an oversupply of homes on the market causing home values to decline. That was one of the many factors that led to the housing crash back in 2008, but that’s for another discussion!
Since then, new home construction has fallen off. For the last 13 straight years, builders haven’t been able to construct enough homes to meet the historical average (as illustrated in green on the graph). That underbuilding certainly contributed to a multi-year inventory deficit going into the pandemic. In our area, this is also partly due to lack of land and building supply.
2. The Pandemic’s Impact on the Housing Market
When the pandemic hit, we saw a renewed focus and appreciation on the meaning of home. Having a safe space to live, work, school, and exercise became even more important for everyone. As mortgage rates dropped to at or below 3%, buyers eagerly entered the market looking to take advantage of those low rates to own a home that would fulfill their changing needs and wants. Simultaneously, sellers hesitated to put their houses on the market dut to concerns about the pandemic.
The result? The number of homes available for sale dropped even further. A recent article from realtor.com explains:
“Last month, the number of home listings dropped 26.8% compared with the same time a year earlier. This meant there were about 177,000 fewer homes listed in what’s already typically a slower month due to the holidays and colder weather. . . .”
What Does All of This Mean for You?
For a buyer, low inventory can be a challenge. You want to find the home of your dreams, and you don’t want to settle. But what if there just aren’t that many homes to choose from?
But wait…there is some good news! Experts are projecting more homes will soon become available thanks to sellers re-entering the market. Danielle Hale, Chief Economist at realtor.com, shares this hope, but offers perspective:
“We expect that we’ll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we’re looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away.”
Inventory is still low, even though more homes are coming. I still advise that you shouldn’t put your plans on hold because you’re waiting for those additional houses to come on the market. Instead, stick with your search and persevere through today’s low inventory as the home you’ve been looking for can suddenly appear. You can find your next home if you are patient, focused, and have a relentless real estate agent, such as myself, in your corner.
Keep focused on your goals and why finding a home is so important. Those things should be the driving force behind your search. Share them with me and be clear about your priorities and your wants. As your trusted advisor, I am your greatest support as you navigate today’s low housing supply to find the home of your dreams!
If you’re planning to buy this year know that, even if inventory improves, it’s still lower than the norm. Contact me today to learn more about what’s happening in our area, what homes are available, and why it’s still worthwhile to prioritize your home search.