One of the top questions we’re hearing from potential buyers this year is: “Why’s it so difficult to actually find homes for sale?”
The answer is that we’re still deep in a seller’s market, so real estate is extraordinarily competitive for buyers right now. The number of buyers searching and competing for homes continues to greatly outweigh how many homes are listed each month. If you’ve been searching for a home for a long time, you’re already familiar with the low inventory of the last 18+ months. However, it’s a challenge that has continued to grow over that time. Let’s have a deeper look at the reasons behind the challenges buyers are facing and what it could mean for potential buyers this year.
A Fall in New Home Construction
New home construction for single-family homes has dropped over the past five decades, including the long-term average for housing units completed. Builders exceeded the average during the housing bubble of 2006-2008, which resulted in an oversupply of homes on the market. This caused the value of homes to decline rapidly in the following years and was one of the leading causes of the housing crash of 2008.
Since that time, the level of new home construction has declined year after year. For the last 13 years, builders haven’t been able to construct enough homes to meet the historical average. This underbuilding left the real estate industry with a multi-year inventory deficit going into the Pandemic.
The Pandemic’s Influence on the Housing Market
In 2020, the Pandemic fueled a renewed appreciation and focus on the meaning of home. Suddenly, millions of people were home-bound and having a safe space to live, work, teach, and even exercise became more important for people around the world. As mortgage rates dropped to around or below 3%, buyers entered the market looking to take advantage of these low rates to secure a home that would meet their needs. At the same time, sellers also hesitated to put their homes on the market as safety concerns were on the rise.
This resulted in the number of available homes dropping even further. In fact, according to a recent realtor.com article, “Over the past two years, as the pandemic raged, the number of homes for sale plunged by over 57%, leading prices to skyrocket 25% from December 2019 to December 2021.”
What Does This Mean for Buyers?
After the last year and a half of the real estate market, buyers may find themselves exhausted trying to find a home that fits their needs. Low inventory presents many challenges, and buyers don’t want to settle for a “now” home when they have a “dream” home in their minds.
Luckily, there’s some good news on the horizon. Experts project that more homes will soon become available thanks to sellers starting to re-enter the market. From the same realtor.com article, Chief Economist Danielle Hales notes, “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.”
While inventory is expected to rise, as of right now, it’s still low. However, that doesn’t mean that potential buyers should put their plans to purchase a home on hold! Buyers can find their next home with the right amount of patience and focus, along with the key strategies that only a Strategic Guide can offer.
Your Path & Post Strategic Guide can help you craft a plan to accomplish what matters most to you. Whatever your goals are, they will be the driving force behind our strategy. Your agent will not only act as your guide along the path, but they will support you as you navigate through the real estate journey.