Why You Shouldn't Wait to Sell Your House
Selling your house when the fewest number of homes are available to buy is what puts you in the driver’s seat. With today’s high buyer traffic and low inventory of houses for sale, this power combination makes now the optimal time to sell, if you’re ready. Whether you want to move-up or downsize, here’s the breakdown on supply and demand and why this imbalance in the current housing market positions this season as the optimal time to make your next move.
High Buyer Demand
Buyer demand is strong right now, and buyers are active in the market. ShowingTime, which tracks the average number of buyer showings on residential properties, recently announced that buyer showings are up 51.5% compared to the same time last year. Daniil Cherkasskiy, Chief Analytics Officer at ShowingTime, notes: “As anticipated, demand for real estate remains elevated and continues to be affected by low levels of inventory…On average, each home is getting 50 percent or more requests this year compared to January of last year. As we head into the busy season, it’s likely we’ll push into even more extreme territory until the supply starts catching up with demand.”
Low Inventory of Houses for Sale
Purchaser demand is so high, the market is running out of available homes for sale. Recently, realtor.com reported: “Nationally, the inventory of homes for sale in January decreased by 42.6% over the past year, a higher rate of decline compared to the 39.6% drop in December. This amounted to 443,000 fewer homes for sale compared to January of last year.”
The National Association of Realtors (NAR) also reveals that, while home sales are skyrocketing, the inventory of existing homes for sale is continuing to drop dramatically. Homes are essentially selling as fast as they’re hitting the market. Below is a graph of the existing inventory for sale:
At the same time, homebuilders are increasing construction this year, but they can’t keep up with the growing demand. While reporting on inventory of newly constructed homes, the U.S. Census Bureau notes: “The seasonally-adjusted estimate of new houses for sale at the end of December was 302,000. This represents a supply of 4.3 months at the current sales rate.” What Does This Mean for You? If you’re thinking of putting your house on the market, don’t wait.
A seller will always negotiate the best deal when demand is high and supply is low. That’s exactly what’s happening in the real estate market today. As 2021 progresses and the pandemic hopefully falls behind us, there will be more houses coming to the market. This includes existing homes and newly built homes.
How Low Inventory is a Win for Sellers
Real estate continues to be called the ‘bright spot’ in the current economy, but as we’ve established, there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale.
The National Association of Realtors (NAR) explains: “Total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million). Unsold inventory sits at a 1.9-month supply at the current sales pace, equal to December's supply and down from the 3.1-month amount recorded in January 2020. NAR first began tracking the single-family home supply in 1982.”
According to NAR, right now, unsold inventory sits at a 1.9-months’ supply at the current sales pace. To have a balanced market in which there are enough homes for sale to meet buyer demand, the market needs 6 months of inventory. Today, we’re nowhere near that number.
If this trend continues, it will get even harder to find homes to purchase, and that may slow down potential buyers. Danielle Hale, Chief Economist for realtor.com, notes: “With buyers active in the market and seller participation lagging, homes are selling quickly and the total number available for sale at any point in time continues to drop lower.”
In essence, many more people are interested in buying than selling, making it hard for buyers to find a home. When this happens, sellers have the upper-hand in the negotiation.
Realtors are reporting an average of 3.7 offers per house and an increase in bidding wars, meaning the demand is there and now is the perfect time to sell for the most favorable terms.
Bottom Line: If you have thought about making a move, this could be the very best time ever to sell your home. We would LOVE to talk to you about the market in your neighborhood, and give you a free market evaluation of your home. Reach out to us today to find out how we can help you!