The supply constraints mean there aren’t as many homes for people to compete for, but open houses are busier than ever. That’s because more people are deciding homeownership is right for them at the moment.
Higher Demand For Homes
A lot of people are looking. Part of that is that millennials are entering their prime homebuying years, experts said. Many members of this big generation are in their 30s, often married with children.
The pandemic has also made remote and hybrid work a possibility for many. That means you don’t have to live close to an office and you might need more space than you can find in an apartment. Remote work means owning a home is a possibility for more people adding to demand.
Fewer People Are Selling
Existing homes make up most of the market, but the supply of those is down also. Some of that has to do with the affordability issues affecting buyers. A survey by Discover Home Loans found 79% of homeowners would rather renovate their homes than move.
High home prices might seem to encourage people to sell their homes and cash in, but most of those people would have to buy another home, and pay those high costs. People in a good position to sell and buy again are people downsizing or moving to a more affordable area.
Building vs. Selling
There are two major ways homes enter the market: Somebody builds a new one or somebody sells an old one. Both of those pipelines are out of sync. For the last decade, builders haven’t put up houses at the rate they needed to in order to handle today’s demand. At the same time, costs have gone up since the pandemic due to market constraints such as labor, lumber and materials, lending, and laws and regulations.
The tight housing market means new construction is even more important for buyers trying to get a home. Supply chain issues also mean new homes take longer to build – from a typical time of about six and a half months to now about eight months. When you add all those together, it’s challenging to build homes.
Home Prices vs. Household Wealth
Experts generally agree that prices will continue to rise over the next year at a little more than the potential growth in household wealth if you purchase a house now.
Moving Ahead vs. Waiting It Out
With many factors to consider, it comes down to each individual's or family's situation or willingness to wait it out. Working with a real estate agent with solid negotiation experience and market knowledge can bring a lot of peace of mind during a major transaction in today's competitive environment.