One question that’s top of mind if you’re considering moving today is: Why is it so hard to find a house to buy? And while it may be tempting to wait it out until you have more options, that’s probably not the best strategy. Here’s why.
There aren’t enough homes for sale, but that shortage isn’t just a problem today. It’s been a challenge for years. Let’s look at some of the long-term and short-term factors that have contributed to this limited supply.
Underbuilding Is a Long-Standing Problem
One of the big reasons inventory is low is because builders haven’t been building enough homes in recent years. The graph below shows new construction for single-family homes over the past five decades, including the long-term average for housing units completed:
For 14 straight years, builders didn’t construct enough homes to meet the historical average (shown in red). That underbuilding created a significant inventory deficit. And while new home construction is back on track and meeting the historical average, the long-term inventory problem isn’t solved overnight.
Today’s Mortgage Rates Create a Lock-In Effect
A few factors are also in today’s market, adding to the inventory challenge. The first is the mortgage rate lock-in effect. Some homeowners are reluctant to sell because of where mortgage rates are right now. They don’t want to move and take on a higher rate than the one they have on their current home. The chart below helps illustrate just how many homeowners may find themselves in this situation:
Those homeowners need to remember their needs may matter just as much as the financial aspects of their move.
Misinformation in the Media Is Creating Unnecessary Fear
Another thing limiting inventory right now is the fear created by the media. You’ve likely seen the negative headlines calling for a housing crash or the ones saying home prices would fall by 20%. While neither happened, the stories may have dinged your confidence enough for you to think it’s better to hold off and wait for things to calm down. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, says:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly driven by fear, uncertainty, and doubt.”
That’s further limiting inventory because people who would make a move otherwise now feel hesitant to do so. But the market isn’t doom and gloom, even if the headlines are. The Aaronson Group can help you separate fact from fiction.
How This Impacts You
If you’re wondering how today’s low inventory affects you, it depends on whether you’re selling or buying a home.
- For buyers: A limited number of homes for sale means you’ll want to seriously consider all your options, including various areas and housing types. The Aaronson Group will help you explore what’s available and find the home that best fits your needs. We can even coach you through casting a broader net if you need to expand your search.
- For sellers: Today’s low inventory offers incredible benefits because your house will stand out. The Aaronson Group can walk you through why selling with these conditions is especially worthwhile. And since many sellers are also buyers, we can help you stay updated on the latest homes available for sale in your area so you can find your next dream home.
Bottom Line
The low supply of homes for sale isn’t a new challenge. There are several long-term and short-term factors leading to the current inventory deficit. If you want to move, connect with The Aaronson Group. That way, you’ll have an expert to explain how this impacts you and what’s happening with housing inventory in your area. Call 949-388-5194 Email: info@previewochomes.com