Why Is Inventory So Low?

There is a lot of confusion in our marketplace right now and our clients are wondering: Why is the inventory so low?? This question begs another question: When will this end?
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Well, these are great questions and there are several answers. Let’s talk about a few.

1. Birth Rate: If we look at birth rates in the mid-1980’s and the increase from “Generation X” (55 million births) to “Millennials” (66 million), and that our Millennials are entering their mid-30’s right now (average home buying age), there is a clear correlation to the surge in buyer activity.
2. COVID-19: The pause in materials production and builder activity that occurred at the onset of the pandemic, as well as continued interruption in production as well as supply chain interruption has also contributed to a lack of new homes in the marketplace. New homes help us to “create” inventory and fill the gaps in the existing market. With prices on lumber nearly tripling over the last year, builders are having a hard time keeping up with pricing, and some have even halted sales for periods of time in order to stabilize their process and projections.
3. Large Investors: Investors see the opportunity that residential real estate offers. Commercial real estate has been a bit unstable, due to less demand in many areas; therefore, investors are invading residential. Many homes don’t even make it to market, as they are bought up by investors before they even list.

These are just a few factors, and they speak to the fact that this new normal in our market is not likely to go away anytime soon (if ever). As investors continue to jump into our market, we are finding that many of our first time homebuyers will have to remain renters, if they don’t secure a property soon. As pricing increases, more and more home buyers are being edged out of their opportunity.

As uncomfortable as this market can be, we are encouraging our clients more than ever, that if moving is on your horizon, sooner is better. I’m not saying we are becoming California, but we might be becoming California. As investor penetration increases in major cities, they find themselves in a predicament where homeownership just can’t make sense financially for much of the population.
 
Want to discuss how this affects you? Let’s chat. Call, text or email anytime to set up a quick consult. Facing reality helps us to navigate our options and set a plan for success!

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