The real estate market is expected to do very well in 2021, with mortgage rates that are hovering at historic lows and forecasted by experts to remain favorable throughout the year. One challenge to the housing industry, however, is the lack of homes available for sale today. A little over a week ago, the National Association of Realtors (NAR) released their Existing Home Sales Report, which shows that the inventory of homes for sale is currently at an all-time low. The report explains:
“Total housing inventory at the end of December totaled 1.07 million units, down 16.4% from November and down 23% from one year ago (1.39 million). Unsold inventory sits at an all-time low 1.9-month supply at the current sales pace, down from 2.3 months in November and down from the 3.0-month figure recorded in December 2019. NAR first began tracking the single-family home supply in 1982.”
(See graph below):
You may be asking yourself: What does this mean for my clients?
You will need to encourage your buyer clients to remain patient during their home search. It may take time, given this historical low inventory, to find a home they love. Once they do, however, be ready to move forward quickly. Having clients pre-approved and prepared to make a competitive offer from the start, and know that a shortage in inventory could mean they will enter a bidding war, can help set realistic expectations. Clarify just how far they are willing to go to secure a home and to lean on you as their real estate professional and an expert to guide them along the way. Assure them that, the good news is, more inventory is likely headed to the market soon. Lawrence Yun, Chief Economist at NAR, notes:
“To their credit, homebuilders and construction companies have increased efforts to build, with housing starts hitting an annual rate of near 1.7 million in December, with more focus on single-family homes…However, it will take vigorous new home construction in 2021 and in 2022 to adequately furnish the market to properly meet the demand.”
Help your sellers realize that, in some ways, they are in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the seller is in a good position to negotiate the best possible terms. Whether it’s the price, moving date, possible repairs, or anything else, they have the leverage to request more from a potential purchaser at a time like this – especially if there have been multiple interested buyers.
The housing market should remain strong throughout 2021, with high buyer interest continuing to drive the market forward. Connect with all your clients today to review the above points and understand their options. For more information about inventory and pricing, check out our latest review of HomeCanary’s Market Pulse Report.