When considering a move, a burning question is: Why does finding a house to buy feel so challenging right now? Although waiting for more options might be tempting, it’s likely not the most effective strategy. Here’s the reasoning.
The issue of limited homes for sale isn’t just a concern for today; it’s been a persistent challenge for years. Exploring both long-term and short-term factors can shed light on the reasons behind this ongoing limited supply.
Long-Term Dilemma: Not Enough Homes Being Built
Building too few houses has been a persistent issue. Builders in the past years haven’t constructed an adequate number of homes. The graph below displays the construction of single-family homes over the last five decades, along with the long-term average for completed housing units.
Builders fell short of constructing enough homes to match the historical average for 14 consecutive years (shown in red). This shortfall resulted in a notable inventory gap. Although new home construction has resumed and is currently meeting the historical average, solving the long-term inventory problem won’t happen instantly.
Current Mortgage Rates and the Lock-In Effect
Several factors are contributing to the inventory challenge in today’s market. One key factor is the mortgage rate lock-in effect. Essentially, some homeowners hesitate to sell due to the current mortgage rates. They fear moving and getting a higher rate than what they currently have on their existing home. The chart below vividly shows how many homeowners could face this situation.
These homeowners should recall that their needs hold as much importance as the financial aspects of their move.
Dispelling Fear: Countering Misinformation in the Media
The media is currently contributing to the inventory constraints by generating fear. You’ve probably encountered negative headlines predicting a housing crash or stating that home prices would drop by 20%. Although neither of these scenarios occurred, these stories may have shaken your confidence enough to make you believe it’s wiser to postpone and wait for things to settle down.
This is further constraining inventory because people who would typically make a move now hesitate to do so. However, the market isn’t all doom and gloom, despite what the headlines say. An agent can assist you in distinguishing between fact and fiction.
How this impacts you:
If you’re curious about how the current low inventory situation impacts you, it depends on whether you’re selling, buying, or doing both.
- For Buyers: Having a limited number of homes for sale means you’ll need to carefully consider all your choices, including different areas and types of housing. A skilled professional will assist you in exploring all available options and finding a home that perfectly suits your needs. They can guide you in broadening your search if necessary.
- For Sellers: The current low inventory actually provides remarkable advantages because your house will stand out in the market. A real estate agent can explain why it’s especially beneficial to sell under these conditions. Additionally, since many sellers are also buyers, that agent serves as a crucial resource to keep you informed about the latest homes available for sale in your area, aiding you in finding your next dream home.
The shortage of homes for sale has been an ongoing challenge. Several factors, both long-term and short-term, contribute to the current inventory deficit. If you’re considering a move, reach out to us. This way, you’ll have an expert to clarify how this situation affects you and provide insights into the housing inventory in our area.