The United States real estate market is facing a different type of crisis. There is a historic shortage in national housing inventory. In fact, there is the fewest number of listed homes since 1982.
Currently, there are just over 1 million homes for sale in the United States. At this time last year, there were roughly 1.46 million for sale. This accounts for a 30% decline and is raising red flags for the industry’s near-term future.
Read on to learn everything about the low housing inventory crisis. Explore topics like root causes of the crisis and when to sell your house.
What Is the Root Cause of Low Housing Inventory?
There are a few different factors causing low inventory. The coronavirus pandemic is a primary driver in housing demand.
Approximately 16 million Americans fled major cities last year. With social scenes crippled due to Covid-19, there is less incentive to live in the city.
Another driver of outward migration is the shift to remote working. By 2025, experts forecast that more than 36 million people will work from home.
This means that workers no longer have to live in close proximity to the city they are employed in. They can accept longer commutes knowing that they won’t be in the office often. Also, remote workers can find a cheaper cost of living outside the expensive boundaries of the city.
Record-low federal interest rates are also driving housing demand. Homebuyers are taking advantage of cheap financing costs to get into the market. The end result is that supply cannot keep up with demand.
Buyers are struggling to find a home under these conditions. There is little time for deliberation and an aggressive approach is necessary to close any deal.
When to Sell Your House?
The underlying conditions in the real estate market do not favor buyers. However, it definitely meets the criteria of a seller’s market.
Sellers are reaping the benefits of high demand and low inventory. Bidding wars are increasingly common and many sellers are getting more than the asking price.
Houses are moving faster than ever before. It is not uncommon for a new listing to receive multiple offers on the first day it is available.
Some sellers are not even putting their house on the market. Instead, they contact a we buy houses company to buy their home. The advantage is that these investors do not assess fees or commission on the transaction. This ultimately puts even more money in the seller’s pocket.
Real estate investors are negatively affected by this low inventory crisis. There are fewer opportunities out there to turn a profit. Since they are squeezed, investors are often willing to pay more than the asking price to close a deal.
How to Play the Low Housing Inventory Crisis?
Your strategy depends on which side of the fence you are on. Buyers need to act fast and present serious offers.
Sellers are sitting back and letting the market come to them. They are receiving more than the asking price and selling quickly.
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