Why Is There a Shortage of Available Homes?
If you're considering relocating, you're likely asking: Why is finding a suitable home so difficult right now? While you might be tempted to wait for more housing options, it might not be the best course of action. Here’s the rundown.
The lack of homes for sale isn't a recent dilemma. This shortage has persisted for years. Let’s delve into both immediate and long-standing factors causing this scarcity.
Chronic Underbuilding Contributes Significantly
A primary reason for the sparse housing inventory is that there hasn’t been sufficient new construction in recent decades. Consider the following data on single-family home constructions over the last fifty years:
Builders consistently failed to meet the historical average for home completions for 14 consecutive years (highlighted in red). This has led to a pronounced inventory gap. While current construction rates align with historical averages, the overarching inventory shortage won't dissipate instantly.
Current Mortgage Rates Cause Sellers to Hesitate
Several current market dynamics further exacerbate the shortage. One such factor is the mortgage rate lock-in effect. Some homeowners hesitate to sell because they’re enjoying historically low rates and fear securing a higher rate with a new purchase. Consider this illustration of how many homeowners might be in this predicament:
However, homeowners should weigh their personal needs against financial factors when contemplating a move.
Misleading Media Narratives Induce Caution Misinformation
Often perpetuated by sensationalized headlines, also hampers inventory. Disheartening news about potential housing crashes or significant price drops, even if unfounded, can make potential sellers wary. Jason Lewris from Parcl notes:
"When devoid of reliable, current information, fear, uncertainty, and doubt heavily influence real estate decisions."
This misinformation leads many would-be movers to second-guess, further tightening the market. But remember, the entire market isn't as grim as some headlines suggest. Engaging with a realtor can help discern facts from misconceptions.
How Does This Affect You?
The implications of the limited housing supply vary based on whether you're buying, selling, or both.
For buyers: Fewer available homes mean you should be open to a wider range of locations and property types. A proficient realtor can guide you through all possibilities to identify the perfect fit and even help you widen your search if needed.
For sellers: The current low inventory can be advantageous, as your property will be more noticeable. An experienced agent can explain why selling now could be beneficial. If you're also looking to buy, they can keep you updated on fresh listings, aiding in your quest for the ideal new home.
The limited housing supply isn't a fresh predicament. Several ongoing and emerging factors have led to the existing housing shortfall. If you're considering a property-related move, let's get in touch. It's essential to understand the local inventory landscape and its implications for your plans.