Why Is Housing Inventory So Low?
Why is it tough to find a house to buy today? Waiting for more options might not be wise. Here’s why:
Housing shortage isn’t new; it’s a long-term issue. Long-term and short-term factors contribute to limited supply.
Long-term issue: Builders haven’t constructed enough homes, leading to low inventory. Graph depicts decades of single-family home construction, including long-term averages
Single Family Housing Units Completed:
Builders have consistently fallen short of the historical average for 14 years, leading to a significant inventory deficit (as seen in the graph in red). Although new construction is currently aligning with the historical average, the long-term inventory issue won’t be resolved quickly.
Mortgage Rates:
Today’s market faces additional challenges, including the mortgage rate lock-in effect. Some homeowners hesitate to sell due to current low mortgage rates, fearing higher rates on a new home. The chart below illustrates this situation.
Misinformation in the Media is Creating Unnecessary Fear:
Media coverage has contributed to inventory constraints. Negative headlines predicting a housing crash or significant price drops, though not realized, may have eroded confidence, leading some to delay buying, waiting for market stability. Media-induced hesitancy among potential buyers is exacerbating inventory issues. Despite negative headlines, the housing market isn’t necessarily bleak. Consulting a real estate agent can provide clarity amid the noise and help you make informed decisions.
The impact of today’s low housing inventory depends on whether you’re buying or selling:
For buyers: Limited options mean considering different areas and housing types. A professional can help you explore all available choices and broaden your search.
For sellers: Low inventory benefits you as your property stands out. A real estate agent can explain why selling in these conditions is advantageous. They also help you stay updated on new homes for sale, crucial if you’re also a buyer looking for your next dream home.
The Bottom Line:
The housing inventory shortage is not a recent issue, stemming from a mix of long-term and short-term factors. If you’re planning a move, it’s wise to engage a real estate agent. They can provide insights into how this affects your situation and keep you informed about housing inventory conditions in your specific area.