Showings continue to be strong, 15.8% ahead of the same time last year. New listings are holding steady while pending sales increased again. It is encouraging that coming soon listings rose… a sign of more new listings to come.
Notice how the pending trend line roughly follows the same trajectory as the new listings. That is an indication of how the inventory feeds the market… buyers can’t buy without homes for sale.
The chart below from the Minneapolis Area Association of Realtors dramatically shows how far we are falling behind in inventory supply… 27.2% below one year ago, and that was low!
from our blog at Keeping Current Matters
Inventory is arguably the biggest challenge for buyers in today’s housing market. There are simply more buyers actively looking for homes to purchase than there are sellers selling them, so the scale is tipped in favor of the sellers.
Why is inventory so low?
There are many reasons why it’s hard to find a home to buy today, stemming from an undersupply of newly constructed homes to sellers pressing pause on their moving plans due to the current health pandemic. One of the key factors making it even more challenging, however, is the amount of time current homeowners are staying in their homes. There has truly been a fundamental shift in the market that started about 10 years ago: people are staying put longer, and it’s contributing to the shortage of houses for sale.
In the 2019 Profile of Home Buyers and Sellers, NAR explained:
“In 2019, the median tenure for sellers was 10 years…After 2008, the median tenure in the home began to increase by one year each year. By 2011, the median tenure reached nine years, where it remained for three consecutive years, and jumped up again in 2014 to 10 years.”
As shown in the graph below, historical data indicates that staying in a home for 5-7 years used to be the norm, until the housing bubble burst. Since 2010, that length of time has trended upward, toward 9-10 years, largely due to homeowners aiming to recoup their equity:
Thankfully, with the strength the market has gained over the last 10 years, today’s homeowners are in a much better equity position. Now is a fantastic time for homeowners who are ready to make a move to break the 10-year trend and sell their houses, especially while buyer demand is so high and inventory is so low. It’s a prime time to sell.
In addition, with today’s historically low interest rates, there’s an opportunity for sellers to maintain a low monthly payment while getting more house for their money. Think: move-up opportunity, more square footage, or finding the features they’re really looking for rather than doing costly renovations. With more new homes poised to enter the market this year, homeowners ready to make a move may have a golden opportunity to do so right now.
Bottom Line
There are simply not enough houses for sale today. If you’re ready to leverage your equity and sell your house, let’s connect today. It’s a great time to move while demand for homes to buy is extremely high.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
