Unsurprisingly, inventory has been at record lows this year, leaving many buyers and sellers unsure of what to do. In order for a real estate market to remain stable, there needs to be an equal balance of supply and demand, which has not been the case.
Many are wondering why inventory has been so low, if inventory will improve, and what this means for them going forward. Let’s dive into a few reasons for the low inventory and how it affects buyers and sellers in the current market.
Mortgage Rates
Mortgage rates have been one of the biggest causes of low inventory. During the pandemic, we saw historic lows below 3% in some cases, which many buyers were taking advantage of. This is causing problems for the current market because homeowners are locked into such low rates that they don’t want to give up by selling their homes.
On the flip side, we are currently experiencing high, or higher than we’ve seen in the past few years, mortgage rates than before, which is making many buyers not want to purchase homes.
New Construction Homes
While new construction homes are starting to make a little bit of a comeback, with many builders offering incentives, there has been a lack of new construction homes available since the 2008 housing bubble and during the pandemic. Over the past few years, builders have struggled with supply costs and finding skilled workers to build new homes.
Remote Work and Relocation
During the pandemic and even now, remote work has become extremely popular, leading many buyers to opt for cheaper homes that are further away from offices instead of moving closer to their workplaces. In addition, there have been fewer relocations due to remote work, so fewer people are looking for homes in other areas.
What Does This Mean?
For Buyers: Recent numbers show buyers are getting used to the higher mortgage rates and getting back out there. Home prices aren’t expected to decrease anytime soon, so you might as well work with what you have. Stay patient, be prepared to act fast, and compromise on things that are wants over needs.
For Sellers: While we’re still in a seller’s market, it’s hard out here for sellers, too. You can still get top dollar for your home, but keep in mind that buyers are having a rough go of it. Set logical expectations, price your home to sell, and be willing to negotiate.
In our ever-changing real estate market, you never know what will happen. It’s important to be aware and work with an experienced real estate agent to help you through the process. If you have any questions or are wondering if now is the time to buy or sell, please contact us! We would love to review your options and see how we can help you!