What’s causing our inventory to be so low, and how does this affect you in the market? Find out today.
In certain areas and price points, there’s a nine- or 10-month supply of homes, and in others, there’s just a two-month supply. To put it in perspective, a six-month supply of homes is a balanced market; anything less than that is a seller’s market and anything over that is a buyer’s market.
So what’s going on? Why do some areas have such low inventory? There are a couple of reasons why:
For one, interest rates are now at a three-year low—just 3.25% for a 30-year fixed-rate mortgage. A year ago, we were a full 1% higher than that, and my very first mortgage ever was at 8%! If you could lock in a 3.25% rate right now, you’d be hitting a home run on a 30-year mortgage. So, since affordability is up, buyers are scooping up available homes.
I’ve been hearing all these incredibly complex explanations as to why inventory is low, like the fact that it’s an election year, the economy isn’t right, etc. Here’s the reality: 10 years ago, statistics showed that on average people moved once every seven years. More recent stats show that people now move every 13 years on average. Think about that: Far fewer people are moving every year than they were a decade ago. The new inventory that we might have seen in older markets just isn’t coming into our current market.
However, we do have new buyers entering the market. Millennials are quickly becoming the dominant group of buyers in real estate, and they’re coming in with good credit and income, but there’s just not enough inventory for them to buy.
You might think that means new construction will pick up to compensate, but we live in upstate New York—it takes a ridiculously long time to get a new subdivision approved. As someone who used to sit on a planning board, I know this from experience. Even once they are approved, there’s still a six-month timeframe to build the house. From the time a developer buys a lot to the time they build the infrastructure of the house, you could be looking at 24 to 36 months.
If you’re a seller, this is an amazing time to list your home. For those who are planning to retire soon, the next five years will probably be the best time to sell your home to start renting or to move to Florida like many of my clients.
If you’re a buyer, you’ll want to work with a team that has a consistent number of homes coming onto the market. Clancy Real Estate has a tremendous number of homes coming on the market every single week. We can even match you with homes that haven’t yet hit the market.
Don’t hesitate to reach out to us for any questions you have about buying, selling, or learning more about what’s going on in your market area. I love talking about real estate, and I enjoy helping people achieve their real estate goals.