Today, almost every industry is suffering from supply chain disruptions. This also applies to the current US housing market, where buyer demand far exceeds housing supply.
Buyer demand is currently very strong. The National Association of Real Estate Agents (NAR) has released the latest existing-home sales report. This shows a surge in sales in January. Existing home sales rose seasonally to 6.5 million annually, up 6.7% from the previous month, with sales increasing in all regions. However, there are major challenges.
Inventory is the lowest ever
The market is short of sellers because the demand for buyers is so high. The above report points out that the seller's inventory fell to 1.6 months this month. As a result, Lawrence Yun, Chief Economist at NAR, said: In January. It helps to confirm this point. Here's a graph comparing January inventory over the last six years.
As the graph shows, new listings coming on the market have decreased over the last four years (shown in blue in the graph). The graph also reveals that carry-over inventory has plummeted in recent years. This is because listings are now sold so quickly, they don’t stay on the market long enough to carry over month-to-month (shown in green in the graph). In other words, homes are not staying on the market for months as they had prior to the pandemic. In the report mentioned above, NAR reveals that:
“Seventy-nine percent of homes sold in January 2022 were on the market for less than a month.”
Odeta Kushi, Deputy Chief Economist at First American, explains it like this:
“A higher velocity of sales (lower [Days on Market]) helps to explain a housing market characterized by both higher sales & lower inventory. Many resale transactions are happening so quickly that they ‘flow’ in & then out of the ‘stock’ between the fixed monthly measurement of inventory.”
What Does This Mean for Sellers?
Anyone thinking of putting their home on the market shouldn’t wait. A seller will always negotiate the best deal when demand is high and supply is limited. That’s exactly the situation in the real estate market today.
Later this year, inventory (and by extension, your competition) will increase as many homeowners are waiting to put their homes on the market in the spring and early summer.
In addition, Len Kiefer, Deputy Chief Economist at Freddie Mac, says:
“Housing starts start off 2022 strong, just edging out 2021 for most in January since 2006.”
As these newly built homes are completed, they will also become competition for your house. This gives you a tremendous opportunity right now. Don’t wait for that increase in competition in your area. If you want to sell in 2022 and are ready to start the process, today is the day to list your house.
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