To say that our neck of the woods is wildly popular would be an understatement. From national press accolades as one of the country’s best places to live to excellent schools, our communities offer an unparalleled lifestyle.
Its popularity is one reason that our market is being particularly hard hit by a low inventory of homes for sale. With far more buyers in the market than homes to sell, prices are soaring in response to the demand.
How is “inventory” determined?
Real estate professionals answer a hypothetical question when determining the absorption rate for the current inventory of homes for sale:
“How long would it take to sell every listed home if no new homes came on the market?”
Finding the answer requires using a specific calculation that results in a “months of inventory” figure.
As of this writing, U.S. Existing Home Months’ Supply is at 3.30, which is up from 3.10 the previous month. In fact, the inventory of available homes has been steadily increasing, month over month, since December of 2022, according to research from the National Association of REALTORS.
Most real estate professionals agree that an inventory of 5 or 6 months is a sign of a balanced housing market. We still have a way to go to reach either of those numbers, but the steady increase over the past 10 months is encouraging for homebuyers.
This is where we are right now – a market that still favors sellers, but is in flux. If you hope to take advantage of the sellers’ market, jump in soon.
Why are there so few homes for sale?
The reasons behind our low inventory situation are multi-pronged.
Mortgage interest rates
Not only are rates higher than they’ve been in some time, but folks who bought when they were super low are reluctant to sell. “… homeowners don’t want to give up their low mortgage rates,” according to Holden Lewis at NerdWallet.com.
Baby boomers (born between 1946 and 1964)
Our older generation is taking much of the blame. Surveys of this generation of homeowners (33 million are owner-occupants), find that the majority of them have decided to age in place. Plus, they are concerned about number 1, above, losing their current low mortgage rate if they sell and then buy another home.
“New home sales are up almost a third compared to last year, even as sales for existing homes remain in the doldrums,” claims Diccon Hyatt at Investopedia.com.
Sounds like good news, right? Not so fast.
Those higher interest rates aren’t only hurting homebuyers. Builders need credit as well and financing their projects has become vastly more expensive.
While housing permits have increased, completions have dropped to the “… lowest level since January 2022,” according to Lucia Mutikani at Reuters.com.
Finally, investors who have been snatching up homes over the past few years are seeing rents rise at an astonishing rate. “Those investors have no incentive to sell,” Dennis Cisterna, CEO of Investability Solutions tells Lewis.
What are you waiting for?
If you’re thinking of selling your home, why are you waiting? With each increase in mortgage rates, a certain number of potential buyers leave the pool. If those numbers grow larger, the market will change and prices may begin to come down.
Right now, your home value is most likely at a record high and buyers are clamoring for homes. If ever there was a better time to sell a home, this is absolutely it.
Many would-be sellers tell us that they’re hesitating because of a fear that they won’t be able to find a suitable replacement home. Buying a home while trying to sell one can be challenging, but we offer brilliant solutions that make the process far less stressful.
Please reach out to us if you have any questions about the real estate market here in our corner of the world We love to talk about real estate!