Why is there a housing shortage?
Construction Fell Behind
After builders overproduced during the housing bubble, they haven't been able to keep up with the demand. Now several years behind, the pandemic stopped and slowed it all down, while demand continued.
New construction plays a vital role in the number of homes that are sold in a year. Builders have struggled with unstable building supply costs and a lack of skilled tradespeople to build new homes. Permits for new builds were behind by 24% in 2020.
Pandemic Increased Demand
The pandemic impacted real estate in a surprising way. While people were forced to do everything from home, owning a home became more important.
Buyers entered the market with enthusiasm, ready to take advantage of the very low interest rates, dipping below 3%. But sellers were afraid to list their homes, unsure of the market and what was happening in the world. The demand was far greater than the supply.
Low Low Interest Rates
Interest rates are important to the housing market for several reasons. They determine how much we will have to pay to borrow money to buy a property, and they influence the value of real estate. Low interest rates tend to increase demand for property, driving up prices, while high interest rates generally do the opposite.
There are many factors that impact how much mortgages cost. Lenders will first consider the general cost of borrowing in the economy, which is based on the state of the economy and government monetary policy.
The prequalified bird gets the worm
You need to be prequalified so you can make an offer and act swiftly. The home you want today may not be available tomorrow.
I can help you get started by connecting you with a lender.
WAITING TO BUY:
Rising mortgage rates should influence your decision against waiting. We won't know for many years how the pandemic truly impacted the real estate market, but right now we can see that inventory is low and will remain low.
It's hard for buyers when there isn't much inventory available. Their tendency is to wait, in the hopes that more options will become available. That means that your home might sit longer than you want, even with less competition.
If you have a great agent, then just be patient and listen to their advice. There is a buyer for every home.
Over the past two years, as the pandemic raged, the number of homes for sale plunged by over 57%, leading prices to skyrocket 25% from December 2019 to December 2021, according to a recent Realtor.com® report.