Here’s what you need to know about what’s happening in the market.
On a national level (and certainly here in DFW), we are managing less than half the number of homes available for sale than we would have expected in years past. That’s really wreaking havoc on our market.
The overall market is driven by supply and demand, as you know. Our high demand is driven by low interest rates, the desire for more space, and the swaths of millennials entering the market now that they’re of home-buying age.
The supply side is a bit trickier. The average age of homeowners are at higher risk of contracting coronavirus, so it’s understandable that people of a certain age don’t want people walking through their homes and aren’t currently deciding to move elsewhere. That’s an entire set of houses that aren’t being sold.
Those who are comfortably employed may not want to move on to their forever homes because they’re not sure how long remote working will be sustainable. That uncertainty has also stifled a set of houses that might have otherwise been put on the market. There’s also the issue of mortgage forbearance. It’s helped those who have experienced income loss, but it has also kept a set of houses that might otherwise come up for sale as foreclosures or distressed sales from entering the market.
Further still, new construction home inventories have reached historically low levels for a few reasons:
- The recession decimated the home-building industry
- There has been resistance from some communities where building guidelines have slowed down development
- The crackdown on immigration has changed the labor pool that has historically had construction-related jobs
- Tariffs on raw materials have raised the prices.
Finally, our low interest rates are causing people to stay in their homes so that they can cling to their low rate. Plus, low mortgage rates incentivize some homeowners to hang onto their homes to use as investment properties as opposed to selling them.
So when will home supply increase? Here’s what experts predict:
- More homes are going to be built
- More homes will be put up for sale as more people get vaccinated
- Some homeowners may put up their homes for sale once forbearance capacities go away
- Individual rental properties may come onto the market when their owners see the ridiculous profits they can make by selling them
If you’re curious to see how these market dynamics impact the value of your home, or you have any questions about real estate in general, don’t hesitate to reach out to me. I’d love to be your residential real estate resource.