If you’re considering buying or selling a home, it’s important to be aware of current market conditions in your area. Currently, much of our country is experiencing a nearly unprecedented shortage of home inventory. Even though the Boulder market is well known for being competitive, we’re continuing to see cutthroat bidding wars spurred by extremely low inventory. This isn’t just true for our market–inventory across the country remains incredibly low. Here, I share more about this phenomenon and why it may be occurring.
Available Homes Have Sharply Declined
If you’ve started your search for a home, you’ve almost certainly noticed that available properties are few and far between. According to the latest data gathered by Altos Research, only half the number of homes are available this winter as compared to the same time last year. Although inventory has been trending downward for some time, this is a steep decline in just one year.
Why Inventory is Limited
Markets in every corner of the U.S. are experiencing low inventory, including bustling metros such as Atlanta, Austin, Chicago, New York, Washington, and Cleveland.
The demand for houses is currently much higher than the supply, driven by historically low interest rates and the desire for more space and privacy amid the pandemic. Although many individuals are on the search for property (and willing to offer above asking price), supply is dwindling. This is likely a result of homeowners feeling hesitant to list their houses during these uncertain times. Baby boomers make up the largest share of homeowners, and this demographic group is at higher risk of serious illness or death from COVID-19. It makes sense for these individuals to be wary of opening up their homes for showings and open houses, so many are making the choice to stay put.
Other Contributing Factors
Since mortgage rates have been relatively low since the housing crash, many homeowners have chosen to offer their properties for rent rather than selling. Over the course of the past decade, the number of single-family homes on the rental market has risen by more than seven million. Many of these properties are owned by individuals (not investors) who haven’t been in a hurry to sell thus far.
The pandemic is also contributing to low inventory. Since many homeowners with government-backed mortgages were in forbearance during the height of the pandemic, they have avoided foreclosure or forced sale.
Additionally, new builds are slow to catch up to demand. After the housing crash, many builders went out of business. Strict immigration policies from the Trump administration have also limited the labor supply that’s necessary for new builds, and tariffs increased the cost of materials. New builds are desperately needed in many parts of the country, since this is the most direct way to bring new inventory to the market.
The real estate market in America is in a unique place as supply and demand are on opposite ends of the spectrum. If you’re planning to sell your home in Boulder, now may be an excellent time to list. Likewise, you may be interested in buying while the interest rates remain low. Whether you’re planning on buying or selling, you’ll need an experienced realtor to help you navigate this unprecedented market. To get started, please contact my team.