Real estate has been called a “bright spot” in the current economy, but there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of inventory, or homes for sale.
Buyers are actively searching for and purchasing homes, looking to capitalize on today’s historically low interest rates, but there just aren’t enough houses for sale to meet that growing need. Sam Khater, Chief Economist at Freddie Mac, says “Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery. These low rates have ignited robust purchase demand activity. However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”
According to the National Association of Realtors (NAR), right now, unsold inventory sits at a 3.1-month supply at the current sales pace. To have a balanced market where there are enough homes for sale to meet buyer demand, the market needs inventory for 6 months. Today, we’re nowhere near where that number needs to be. If the trend continues, it will get even harder to find homes to purchase this fall, and that may slow down potential buyers. What does this mean? If you have been thinking of selling, do so now to keep buyer interest and motivation high! Danielle Hale, Chief Economist at realtor.com, notes “The overall lack of sustained new listings growth could put a dent in fall home sales despite high interest from home shoppers, because new listings are key to home sales.”
Buyers are clearly scooping up homes faster than they’re being put up for sale. The number of total listings continues to decline even as new listings are coming to the market. This is even more true with lower priced listings, which appeal to first time buyers. Javier Vivas, Director of Economic Research at realtor.com, says “The post-pandemic period has brought a record number of homebuyers back into the market, but it’s also failed to bring a consistent number of sellers back. Homes are selling faster, and sales are still on an upward trend, but rapidly disappearing inventory also means more home shoppers are being priced out. If we don’t see material improvement to supply in the next few weeks, we could see the number of transactions begin to dwindle again even as the lineup of buyers continues to grow.”
Does this mean it’s a good time to sell? Yes. If you’re thinking about selling your house, this fall is a great time to make it happen. There are plenty of buyers looking for homes to purchase because they want to take advantage of historically low interest rates. Realtors are also reporting multiple offers per house and an increase in bidding wars, meaning the demand is there and the opportunity to sell for the price and terms you want is in your favor as a seller. We are seeing buyers waiving appraisals, inspection repair requests, and not asking the seller to pay any closing costs in order to make their offers more attractive.
Even though summer is coming to an end, this is not your typical fall market. With so many people still working from home, and now with the kids doing virtual learning, many buyers have not only the extra time to search for homes, but also the need. Buyers are realizing that their home is much more than just a place to sleep and eat, and that they may need more space or a completely different layout.
If you’re considering selling your house, this is the perfect time to connect so we can talk about how you can benefit from the market trends in the Richmond area. Our team is your one stop shop- we have stagers on staff, a mortgage expert, a design and remodeling consultant, in house financing and insurance, and 3 full time Realtors at your service. We also have great relationships with contractors and handymen, as well as the best real estate attorneys in town. Give us a call or send us an email today for a free market analysis of your home.
By Haley Beck, Treehouse Realty VA, with some content from Keeping Current Matters