Housing Shortage Impacting Buyers Nationwide
Driven by record-low mortgage rates and stable jobs in the professional, administrative, and trade sectors drives more demand than available housing stock.
How significant is the shortage of homes for sale across the US? Nearly 46% less inventory than a year ago. Check this out based on Altos Research, the trends back to 2016:
- Jan 2021 – 400,000 homes
- Jan 2020 – 740,000 homes
- Jan 2019 – 815,000 homes
- Jan 2018 – 775,000 homes
- Jan 2017 – 826,000 homes
- Jan 2016 – 954,000 homes
As you can see, lower inventory has been a trend. Going into 2021, the COVID-19 pandemic and other factors magnified this trend dramatically. So, the natural question is, what’s happening to housing prices? Well, let’s look back on median U.S. home prices using Altos Research data from January 2017:
- Jan 2017 – $270,000
- Jan 2018 – $290,000
- Jan 2019 – $300,000
- Jan 2020 – $305,000
- Jan 2021 – $336,000 up 10%
Why? Several reasons. Residential real estate sales closely mirror mortgage interest rates and jobs. For the last decade, we’ve had a definite trend in both of these critical factors. Add into the mix that Gen Y or Millennials are coming of age to start families and needing homes, and now you have a trend, not a fad.
Born between 1981 and 1996, Millennials recently surpassed Baby Boomers as the biggest group in the U.S., at nearly 72 million in population, Millennials will continue to be a significant part of the population and drive housing demand for many years.
Yes, but, there are two million homeowners taking advantage of mortgage forbearance, right? True, consider this: Over 60% of those in forbearance have come current, and homeowners in 2020 gained nearly $1 trillion in equity. Combine that with improving economics as we come out of the COVID-19 period and the shortage of housing stock, and anyone needing to sell can do so quickly and downsize.
As a consumer, all of these factors lead me to believe that it’s never been more critical to work with a real estate professional who is a hyper-local expert.
As a real estate professional means inventory in 2021 will be the critical constraint. A couple of ways to uncover hidden inventory:
- Non-owner occupied – 1031 exchange from one property to another. No showings, no open houses, and in most cases, no moves!
- Stay in touch with your sphere and database – it was taking 40 conversations to make one sale, it’s now 80 to 100 to make one sale. Get to work talking about real estate with those you know.
- Rehab – turn ugly ducklings into something beautiful.
- Home Swap – available in some markets, the KNOCK home swap program provides consumers convenience, certainty, and cost savings.
It’s time to reach out of off-market potential sellers. One thing, based on current trends, is that the same home this year will cost at least 5% to 8% more next year, and with a small uptick in mortgage rates, the carrying costs will increase as well. So if the timing is right to get sellers off the fence!
Mark Johnson is the host of “Success Superstars,” a weekly show that highlights the blueprint of success, the co-founder of CoRecruit, and the Chief Executive Officer of JP & Associates REALTORS®, a rapidly growing full-service transaction-based real estate brokerage. He has invested nearly 25 years in understanding the inner workings of high performing real estate agents, teams, managers, and leaders in major markets across the world.