If you’re in the market to buy a home, you may have noticed a glaring problem: there are few houses to pick from, and even fewer that meet your expectations. Right about now, you’re probably thinking, spring real estate buzz? More like housing shortage buzzkill.
And you wouldn’t be the only one. Housing inventory continues to create headlines. Our partners at MBS Highway report that in January, existing for sale inventory hit its lowest point in almost 20 years, and that many markets only have about 30 days of housing supply, which is extremely low.
What’s causing this housing shortage? A list of factors, like:
- Since 2008, the average time homeowners have stayed in their houses before selling has doubled to nearly eight years, according to Attom Data Solutions.
- About 3.2 million owners can’t sell because their homes are still worth less than what’s owed on their mortgage based on reports by CoreLogic.
- More investors have entered the market, and are enjoying the rewards of rising rents and property values, choosing to continue to own rather than sell. Attom says the percentage of single-family homes and condos owned by investors has increased to 35 percent, up from 30 percent on average over the last decade.
- Builders are not replenishing the stock of new homes fast enough, especially for affordable starter homes.
There’s also the issue of seller uncertainty. Many would-be sellers fear giving up a low mortgage rate on their existing home for a potential higher rate on the next one. In addition, they too face the uncertainty of not being able to find the home they’d prefer once they sell.
What’s a buyer to do?
Here’s the saving grace for buyers: a housing shortage can be beat.
First, when the competition is high, strong offers rise to the top. Work with your loan officer to see if you are pre-approved, and it may work to your advantage. By the way, this is what Movement Mortgage does regardless of the market climate.
While most buyers only present a pre-qualification based on a credit score to sellers, we arm our borrowers with a conditional loan commitment based on a full underwrite of the credit package. Which do you think makes more of an impression?
Second, buying now could mean getting in on a projected increase in home values, which experts at MBS Highway say are likely to rise over the next few years due to the growing population and more demand on homes.
Bottom line: home buying and market environments have their ups and downs, but with patience, professional guidance and financial readiness you may be able to make it the right time to buy.