Showing stats are still lagging behind, above data only from November 2. But the listing data below is current as of this morning, November 20.
Both new listings and pending sales are falling, as are coming soon listings. So where does this leave actual homes available for sale? The chart below shows homes for sale in 2019 on the left, homes for sale in 2020 on the right. You can see how 2020 started strong then COVID-19 hit and supply of homes for sale has struggled to keep up with demand. It is now 30.7% behind last year, which was also low compared to previous years.
A survey from Zillow found the top three reasons people are NOT putting their house on the market right now are…
- 31% – financial uncertainty
- 34% – life is too uncertain right now
- 25% – COVID-19 health concerns
In spite of coronavirus concerns, the Mortgage Bankers Association reports that home purchase applications have shown a continued 20% year-over-year growth trend for 25 weeks in a row, with new home purchases up 32.9% in October.
That doesn’t surprise me that new home purchases are up… overall inventory is down and homes for sale are disappearing. Sellers, the market needs you!
from our blog at Keeping Current Matters
Homes for Sale Are Rapidly Disappearing
Through all the challenges of 2020, the real estate market has done very well, and purchasers are continuing to take advantage of historically low mortgage rates. Realtor Magazine just explained:
“While winter may be typically a slow season in real estate, economists predict it isn’t likely to happen this year…Low inventories combined with high demand due to record-low mortgage rates is sending buyers to the market in a flurry.”
However, one challenge for the housing industry heading into this winter is the dwindling number of homes available for sale. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), recently said:
“There is no shortage of hopeful, potential buyers, but inventory is historically low.”
In addition, Danielle Hale, Chief Economist for realtor.com, notes:
“Fewer new sellers coming to market while a greater than usual number of buyers continue to search for a home causes inventory to continue to evaporate.”
One major indicator the industry uses to measure housing supply is the months’ supply of inventory. According to NAR:
“Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.”
Historically, six months of supply is considered a normal real estate market. Going into the pandemic, inventory was already well below this mark. As the year progressed, the supply has was reduced even further. Here is a graph showing this measurement over the last year:
What does this mean if you’re a buyer?
Be patient during your home search. It may take time to find a home you love. Once you do, be ready to move forward quickly. Get pre-approved for a mortgage, be prepared to make a competitive offer from the start, and understand how the shortage in inventory has led to more bidding wars. Calculate just how far you’re willing to go to secure a home if you truly love it.
What does this mean if you’re a seller?
Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the seller is in a good position to negotiate. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to ask for more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Do not be unreasonable, but understand you probably have the upper hand.
Bottom Line
The housing market will remain strong throughout the winter and heading into the spring. Know what that means for you, whether you’re buying, selling, or doing both.
