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Why It’s Difficult to Find a House to Buy: Shortage of Homes
Learn why it’s challenging to find a house for sale today due to a shortage of homes. Explore the long-term and short-term factors affecting the housing market.
If you’re contemplating a move in the current real estate market, you might be wondering: “Why is it so hard to find a house to buy?” While waiting for more options might seem tempting, it may not be the most effective strategy. Here’s why.
The shortage of available homes for sale is not a recent problem; it has been a longstanding challenge. Let’s delve into the factors, both long-term and short-term, that have contributed to this limited housing supply.
Underbuilding Is a Long-Standing Problem
The primary reason behind the low housing inventory is the insufficient construction of new homes in recent years. The graph below illustrates the construction trends for single-family homes over the past five decades, highlighting the long-term average for completed housing units:
For 14 consecutive years, home builders have fallen short of constructing enough homes to meet the historical average (highlighted in red). This chronic underbuilding has resulted in a significant inventory deficit. While new home construction has returned to historical averages, solving the long-term inventory issue is not an overnight endeavor.
Today’s Market Challenges:
Several factors are exacerbating the inventory challenge in today’s real estate market. One key factor is the “mortgage rate lock-in effect.” Many homeowners are hesitant to sell due to the current mortgage rate environment. They are reluctant to move and take on a higher rate than what they currently have on their homes. The chart below offers insights into how numerous homeowners may be impacted by this situation:
Those homeowners need to remember their needs may matter just as much as the financial aspects of their move.
Media-Driven Fear and Its Impact on Housing Inventory
Explore how misinformation in the media has contributed to unnecessary fear in the housing market, affecting potential buyers’ confidence and inventory levels.
The current housing market faces not only an inventory shortage but also a significant influence: the fear generated by media reports. You’ve likely come across alarming headlines predicting a housing crash or steep declines in home prices. While neither of these scenarios materialized, these stories might have shaken your confidence, leading you to consider postponing your real estate plans. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, highlights:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”
Impact of Low Inventory on Home Buyers and Sellers
Discover how the current low housing inventory affects both buyers and sellers in the real estate market. Learn how to navigate this situation with the assistance of skilled professionals.
The impact of today’s low housing inventory varies depending on whether you are in the process of selling or buying a home, or perhaps even both.
- For buyers: If you’re a prospective buyer, the limited number of homes available for sale necessitates a careful consideration of your options. This includes exploring different areas and housing types. Engaging the services of a skilled professional is crucial to help you navigate the market and discover the home that aligns best with your needs. They can also provide guidance on widening your search if necessary.
- For sellers: On the flip side, today’s low housing inventory offers remarkable advantages to sellers. Your house will naturally stand out in this competitive landscape. Collaborating with a real estate agent can be immensely beneficial, and they can explain why selling under these conditions is particularly advantageous. Additionally, since many sellers are also buyers, your agent can keep you informed about the latest homes available for sale in your area, helping you find your next dream home.
Bottom Line
The low supply of homes for sale isn’t a new challenge. There are a number of long-term and short-term factors leading to the current inventory deficit. If you’re looking to make a move, let’s connect. That way you’ll have an expert on your side to explain how this impacts you and what’s happening with housing inventory in our area.
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