Why Has Housing Supply Increased as Sales Have Slowed Down?

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), the inventory of homes for sale this year compared to last year has increased for the last four months, all while sales of existing homes have slowed compared to last year’s numbers.

For over three years leading up to this point, the exact opposite was true; Inventory dropped as sales soared.

NAR’s Chief Economist Lawrence Yun shed some light on what could be contributing to this shift,

“This is the lowest existing home sales level since November 2015. A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

Let’s take a deeper look:

Interest Rates

Since January, 30-year fixed mortgage interest rates have increased nearly a full percentage point (from 3.95% to 4.9%). Fannie Mae, Freddie Mac, the National Association of Realtors, and the Mortgage Bankers Association are all in agreement that rates will continue to increase to about 5.2% over the next 12 months.

“The rise in [mortgage] rates paired with this very strong price appreciation absolutely is slowing housing,” said Fannie Mae’s Chief Economist Doug Duncan.

Even though rates are higher than they’ve been in a decade, they still remain below the average for the 1970s, 80s, 90s, and 2000s!

Mismatch of Inventory

Elizabeth Mendenhall, President of NAR, said it best, “Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range.”

Prices of starter and trade-up homes have appreciated faster than their higher-priced counterparts. Over the last 5 years, the lowest-priced homes have appreciated by 47% while the highest-priced homes have appreciated by only 24%.

According to the Institute of Luxury Home Market’s Luxury Market Report, the $1M-and-up price range is now experiencing a buyer’s market. This means that supply (inventory) has finally caught up with demand and buyers are in the driver’s seat when it comes to negotiations. Additionally, many listings in this price range have experienced price cuts in order to entice buyers to put in offers.

Natural Disasters

Although not fully to blame for the national shortage in sales and inventory, natural disasters like Hurricane Florence, Hurricane Michael, and the wildfires on the West Coast have certainly had an impact.

Bottom Line

Additional inventory coming to market could help normalize the housing market and allow incomes to catch up to home prices. For more information about sales and inventory in our area, let’s get together so we can help you make the best decision for you and your family.

You might also enjoy reading…

• How Will Home Sales Measure Up Next Year?
• 2 Myths Holding Back Home Buyers
• Thinking of Selling Your Home? Here’s Why You Need A Pro in Your Corner
• 2 Factors to Watch in Today’s Real Estate Market Whether Buying or Selling

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Ensure a Good First Impression

Homebuyers make up their minds about a property in the first few minutes. Make sure your home makes that vital first impression. New paint does wonders. Make sure the front yard is flawless with manicured lawns and attractive foliage. Add a hanging basket or some flower pots at the door. The front door is also critical, make sure the hardware is presentable.

Make them Feel Welcome

Don’t forget buying a home is in many ways an emotional decision, so it’s important to give buyers that warm and fuzzy feeling! Keep the temperature in the home at a comfortable level. Light some candles in the bathrooms and make sure it smells nice and clean. Have fresh flowers around the house.

But don’t make it too personal

Make them feel welcome, but don’t go too far. Too much personality, for example in the form of personal possessions and family photos makes it hard for buyers to visualize living in the space.

Clear out the Clutter

Make sure your property is clutter-free for all your viewings. This will make your home look and feel bigger, and the buyers will be able to imagine how they could make the space their own. Make sure that there is a clean, logical flow through the home by getting rid of all excess furniture. Less is more.

Improve Lighting

This is another way to make your home seem more spacious. Open all your curtains and flood the space with natural light. Make sure the darker rooms are also lit. Invest in some light fixtures and fittings, and place them strategically to illuminate even the gloomiest of areas.

Decorate to Sell That House

Slap on a fresh coat of paint in a neutral color to give it that blank canvas look but do not be too sterile. Have some contrast in the trim as well as the ceiling. Neutral colors make properties appear lighter and brighter, so take advantage of this inexpensive and easy option. You may also add color with decorative window coverings, rugs, and towels.

Clean Up Your Act

Your home should be spotless. Make sure the beds are made and the countertops are free of clutter. The dishes should be put away and nothing should be scattered on the floor. Don’t forget to tidy your garden too: Cut the shrubs back, sweep the patio, and wipe down the backyard furniture.

Those Minor Repairs You Put Off

It is easy to forget things such as broken doorknobs, cracked tiles, holes in walls and damaged but buyers will notice them first thing as they are walking around your home.

Maximize Your Space

The golden rule of selling is to make your space look and feel bigger and better than what your competitors have to offer. We’ve already mentioned that lighting your home, both naturally and artificially, can maximize your assets, but getting rid of bulky furniture can also be a great way of making the most of what you have. Large pieces of furniture make a space feel smaller, so put these items into storage and dress your home with more compact pieces.

Don’t Forget Your Floors

Make the investment of improving and investing in those floors. Worn carpets and damaged vinyl floors need to be replaced, and wooden floors especially should undergo some maintenance. This is not chap by any means, but the prospect of selling your home for the best possible price will likely outweigh the cost.

Remove Pets During Showings

You do not need to remind the potential buyer that the previous owner kept pets.

Try to remove your pets from your home when you are showing the home. Having a pet in the house or yard can create complications for your agent while trying to show the house, and puts your pet at risk of accidentally getting out during the showing. There are also liability issues to deal with as well. They may react differently to stranger and it may cause them stress. All pet-related damage should be repaired prior to showing the home. Make sure to also remove all odors and stains. New visitors will notice smells when they come to view the house. This is not something you want to happen. Have your carpet and floors professionally cleaned or replaced. Pick up any messes in the backyard and have any sod replaced and other damage repaired.

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