If you’ve been looking at the real estate market or hearing about it at all, you’ve likely seen that there’s a shortage of homes in our area. Right now, we’re in a strong seller’s market due to a difference between supply and demand. In our market, there are many buyers vying for a home, and not as many homes on the market. This creates a low inventory situation, resulting in a seller’s market. The shortage of homes we are currently seeing is due to 3 main issues:
1. A lack of new builds over time: Supply chains saw big delays during COVID shutdowns around the world, and many supply lines are just starting to get back to normal. This delayed nearly every home build. Some plans for new builds are still delayed as builders catch up from the pandemic-related delays. Because new homes were being built slowly or not at all, the supply of new builds was much less than normal.
2. Low mortgage rates: Mortgage rates hit historical lows during 2020-2022. Coupled with a home-buying frenzy as people moved across the country, many people bought a home and snagged a very low-interest rate at the same time. This has created a mortgage rate lock-in effect. Since homeowners have a low-interest rate on their mortgages, they don’t want to sell their homes and get a new mortgage at a higher interest rate. Where we would typically see people moving, people are now staying in their homes, which goes hand-in-hand with the next issue.
3. Longer times spent in homes: In recent years, homeowners have started to stay in their years longer. Between 1985 and 2009, people spent 6.1 years before selling their homes on average. But that started to change in 2010. Since then, the time that people spend living in their homes has increased to 9.3 years. This has resulted in fewer people moving and fewer homes up for sale.
Each of these 3 issues has combined to create the shortage of homes we currently see and the resulting seller’s market. While we’re in a challenging market for buyers, your real estate agent will help guide you through each step of the way so you can find the perfect home. If you want to talk more about how you can be a successful buyer, just text me at 805.610.0345.