Though inventory has increased, one of our biggest challenges is still relatively low inventory of homes for sale. Mark Fleming, Chief Economist at First American, explains the root causes of today’s low supply:
“Two dynamics are keeping existing-home inventory historically low – rate-locked existing homeowners and the fear of not finding something to buy.”
Let’s break down these two big issues in today’s housing market.
According to the Federal Housing Finance Agency (FHFA), the average interest rate for current homeowners with mortgages is less than 4% (see graph below):
The days on market for homes is increasing which has been a nice ‘break’ for our buyers, they can see a home and then actually digest their thought process in order to ensure they are making the right move for their personal situation and real estate investment goals.
When so many homeowners are rate locked and reluctant to sell, it’s a challenge for a housing market that needs more inventory. However, experts project mortgage rates will gradually fall this year, and that could mean more people will be willing to move as that happens.
The Fear of Not Finding Something To Buy
The other factor holding back potential sellers is the fear of not finding another home to buy if they move. Worrying about where they’ll go has left many on the sidelines as they wait for more homes to come to the market. That’s why, if you’re on the fence about selling, it’s important to consider all your options. That includes newly built homes, especially right now when builders are offering concessions like mortgage rate buydowns.(link to buy down article you posted on our blog that Sal wrote
What Does This Mean for You?
These two issues are keeping the supply of homes for sale lower than pre-pandemic levels. But if you want to sell your house, today’s market is a sweet spot that can work to your advantage.
We are still heavily prospecting based and marketing enhanced which means if inventory is low in a particular area that you are looking- we will personally go out there and find it- this includes phone calls, mailing and marketing to homeowners that are likely to also want to make a move now or in the near future.
Be sure to work with a local real estate professional to explore the options you have right now, which could include leveraging your current home equity. According to ATTOM:
“. . . 48 percent of mortgaged residential properties in the United States were considered equity-rich in the fourth quarter, meaning that the combined estimated amount of loan balances secured by those properties was no more than 50 percent of their estimated market values.”
This could make a major difference when you move. We can show you how to put your equity to work to keep the cost of your new home down.
Rate-locked homeowners and the fear of not finding something to buy are keeping housing inventory low across the country. But as mortgage rates start to come down this year and homeowners explore all their options, we should expect more homes to come to the market. In the meantime, we are working with our sellers that can use the equity in their current home to achieve their goal of making a move and hunting for the right properties to fit what they are looking for.