By now, if you are trying to buy a home, you know how difficult it is to find one. Low supply is leading to bidding wars, high home prices and leaving many potential homebuyers empty-handed.
A new report, however, suggests some much-needed inventory will soon hit the market.
Ten percent of homeowners surveyed by listing site Realtor.com this month plan on putting their home up for sale this year. This is good news. In a typical year just 8% of homeowners list. Even more encouraging, 58% of those who plan to sell this year have homes valued under $350,000, meaning more homes should be available at a price point for first-time buyers.
“New supply is the key ingredient to a successful buying season,” says George Ratiu, senior economist at Realtor.com. “More sellers bringing their homes to market should lead to a slowdown in price growth, leading to improved affordability for many buyers.”
The return of the spring selling season?
To be sure, it’s routine for housing supply to increase around this time, as the spring buying season begins in most markets. With COVID-19 temporarily shutting the real estate market down last March and April, however, this year marks a return to normal — and none too soon.
The return of sellers means the market can start to dig out of a very deep inventory hole. At the current pace of sales, there is a 2.1 month supply of homes available, up from a record low of 1.9 month supply in January, according to the National Association of Realtors. (Roughly a six-month supply is considered balanced.)
Ratiu estimates that an additional 800,000 existing homes are needed to ease the supply crunch and get more balance in the housing market.
“March often sees a boost in inventory, and the return to some seasonal norms is a positive sign that supply is beginning to catch up with demand,” said Treh Manhertz, an economist for listing site Zillow.
Ratiu points out that an increase in supply can also entice homeowners who would like to sell but are concerned about being able to find a new home. With more inventory on the market, he hopes, sellers will become more confident about listing their own homes because they’ll have more options for buying themselves.
Of the 16% of people in Realtor.com’s survey who are planning to sell within the next two to three years, a quarter said they aren’t listing this year because they can’t find a home within their price range. Nearly as many said they aren’t selling now because they don’t know where they want to move or that the logistics of buying and selling at the same time was keeping them from selling sooner.
In fact, of all the homeowners who said they would sell within the next few years, 91% said they would be more likely to sell their homes sooner if they could time the buying and selling of a home perfectly.