Real estate brokers and lenders have shown growing concern over the general lack of inventory on the market, with RE/MAX CEO Nick Bailey estimating that the US housing market is short between four and five million homes. This overall shortage of housing inventory has been an issue for some time, but the problem has only become more acute as mortgage interest has gone up. Without a significant change, prospective buyers may find themselves in a situation where there are simply not enough houses on the market to purchase.
Consistently Low Housing Inventory Sparks Concern
There has been increasing concern over the lack of available housing inventory in the market. As of November, there were an estimated 1.13 million homes available for purchase across the US, which is significantly higher than its low of 860,000 in January 2022, but far below the high of 4.04 million it reached in July 2007. This relative lack of available homes has meant that buyers must compete over the limited number of properties on the market, driving up prices.
Home Builders Nervous About the Future
Despite the high level of demand relative to the number of people seeking a new home, home builder sentiment has been down somewhat the past couple of months. This is due to few people looking to build new homes, with high prices and high interest rates keeping people from wanting to finance new construction. This means there is not likely to be many homes being built to meet this demand anytime soon.
High Interest Rates Squeeze Sellers
For those hoping that existing homeowners might begin to sell to take advantage of these high prices, sadly that may not work well either. This is because prospective sellers often have much more favorable mortgages on their current homes than they could get for any other property on the market. This has left many homeowners feeling like it would be best to stick with their current properties, rather than take a risk and look for a new house.
Signs of Potential Improvement
That being said, not everything is looking pessimistic. Some home builders anticipate that conditions will start to improve over the next year, especially with interest rates no longer on the rise. Lower interest rates could also spur more people to try putting their homes on the market, alleviating the issues with housing inventory and helping to bring life back to the market.
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