Today there are more buyers than sellers in the real estate market. This means that sellers are in control because of the low inventory. The market has completely changed since last year, according to the National Association of Realtors, the total housing inventory is down by 18.8% compared to this time last year. It is not just because of low inventory, there are many factors that go into it. Here is everything you need to know:
Slow Construction is causing low inventory:
Covid-19 has not helped the construction industry. The demand for service is slowing down their production rate, causing a major hold on new construction plans. Due to the lack of workers and supply, this industry is being forced to slow down. The population in our surrounding areas is increasing and it is hard to keep up with the demand of new housing. Without things being built on time it is effecting the inventory of the real estate market.
Low Rates is causing a surge:
The low rates is making everyone want to buy or invest in this market right now. Which is a contributing factor as to why the market is facing such low inventory currently. “Almost everything housing related, including new home sales, home improvement projects and home prices, are in a V-shaped recovery”-NJs Lenders Corp
Sellers are not listing causing low inventory :
Because the mortgage rates are so low people rather refinance their homes or find other ways to save. They would rather save and invest in their own property right now rather than buy a new home. People also don’t feel comfortable putting their homes on the market due to covid-19. They would rather wait until the market is more stable.
Sellers don’t want to be buyers:
This is a sellers market, people selling their home know it is not a good market to become a buyer. The low inventory will effect them and they rather not risk it, especially if they only own one home.
More Space, Larger Homes:
The pandemic has made people start to look for other places to live because of the freedom of working remote. Why live in a small expensive apartment when you can live in a house with a back yard in the suburbs for less money? People are able to afford more and pay less, they are buying up all the homes in the shore town areas which is causing low inventory. People who own large homes also don’t want to sell their homes because they are content.
The market is not in distressed:
“Both the market and equity positions are strong. Because of this, sellers are less likely to be facing foreclosures and short sales, so they don’t have a strong motivation to sell”. –NJs Lenders Corp
Big companies and investors causing low inventory:
Companies who use iBuying programs and investors are out bidding everyone. They are buying everything causing this market to become a sellers market and keeping the inventory low. The only good news so far is that Zillow is not buying anything else until 2021 because they have to “work through the backlog of homes it has already bought. The “iBuyer” model used by Zillow and other real estate companies entails purchasing homes directly from sellers, and then re-listing the properties after doing minor work. But thanks to the current shortage on labor and materials, Zillow can’t close, renovate and resell the homes fast enough.”-Anna Bahney
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