What it means for buyers

Although mortgage rates fluctuated somewhat in January, they are still near record lows, making it an attractive time to buy a home. There’s just one problem – there aren’t that many homes on the market.

At the end of December, the housing stock stood at just 1.07 million homes for sale nationwide, according to the National Association of Realtors. This is the lowest number of units available since 1982. It also means that the housing stock is at 1.9 months of supply, giving sellers a real advantage as it takes a supply of four or more. five months to create more even housing. Marlet.

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Why today’s buyers might really struggle

The limited number of accommodations has a number of implications. First, there is the cost. When any commodity is scarce, demand tends to increase, thereby increasing its price. This is the case with homes today. The median price of a home sold in December was $ 309,800. That’s a huge 12.9% increase from the previous year, and it’s also the highest December median home price on record.

Limited inventory also means that today’s buyers may have to settle for properties that don’t quite meet their needs. This could mean compromises on square footage, layout, outdoor space, and proximity to amenities. It could also mean having to invest extra money in properties to update them – and that’s on top of paying a premium to buy a home in today’s inflated market.

Buy now or wait for inventory to open?

One of the main reasons the home inventory is so low is that sellers have been reluctant to list their homes during the pandemic. And while part of it comes down to the health implications of welcoming strangers inside for open houses and screenings, it’s also due to not wanting to make any major moves during a period of extreme economic uncertainty.

But as vaccines roll out to a more ubiquitous level, we might see the housing stock start to open up later in the year. At the same time, mortgage rates are likely to remain relatively stable as 2021 progresses. As such, it could be beneficial for potential buyers to sit back and see the evolution of stocks in the coming months. And it could pay off in particular to hold out until spring, which has always been a popular season for listing homes.

Of course, some buyers may want to take the plunge now, when mortgage rates are still extremely attractive. This isn’t necessarily a bad idea, especially for those with a good home buying budget. But anyone trying to navigate the residential real estate market today should be prepared for a battle. Many homes end up in bidding wars – a potentially costly scenario for buyers. And many sellers do not move on the price, nor show a willingness to make concessions, such as fixing issues before closing a sale.

Buying a home in a market where stocks are at such a low level certainly has its challenges. Those who give it a try should be prepared for what could, unfortunately, be a very stressful process.

About Andrew Miller

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