{"id":5116,"date":"2023-09-14T05:30:00","date_gmt":"2023-09-14T10:30:00","guid":{"rendered":"https:\/\/nwiloanguy.com\/blog\/why-is-housing-inventory-so-low\/"},"modified":"2023-09-14T05:30:00","modified_gmt":"2023-09-14T10:30:00","slug":"why-is-housing-inventory-so-low","status":"publish","type":"post","link":"https:\/\/nwiloanguy.com\/blog\/why-is-housing-inventory-so-low\/","title":{"rendered":"Why Is Housing Inventory So Low?"},"content":{"rendered":"

\"Why<\/p>\n

One question that\u2019s top of mind if you\u2019re thinking about making a move<\/a> today is: Why is it so hard to find a house to buy?<\/em> And while it may be tempting to wait it out until you have more options<\/a>, that\u2019s probably not the best strategy. Here\u2019s why.<\/p>\n

There aren\u2019t enough homes available for sale, but that shortage<\/a> isn\u2019t just a today problem. It\u2019s been a challenge for years. Let\u2019s take a look at some of the long-term and short-term factors that have contributed to this limited supply.<\/p>\n

Underbuilding Is a Long-Standing Problem<\/strong><\/h4>\n

One of the big reasons inventory is low is because builders haven\u2019t been building<\/a> enough homes in recent years. The graph below shows<\/a> new construction for single-family homes over the past five decades, including the long-term average for housing units completed:<\/a><\/p>\n

For 14 straight years, builders didn\u2019t construct enough homes to meet the historical average (shown in red<\/em>). That underbuilding created a significant inventory deficit. And while new home construction<\/a> is back on track and meeting the historical average right now, the long-term inventory problem isn\u2019t going to be solved overnight. <\/p>\n

Today\u2019s Mortgage Rates Create a Lock-In Effect<\/strong><\/h4>\n

There are also a few factors at play in today\u2019s market adding to the inventory challenge. The first is the mortgage rate lock-in effect<\/a>. Basically, some homeowners are reluctant to sell because of where mortgage rates<\/a> are right now. They don\u2019t want to move and take on a rate that\u2019s higher than the one they have on their current home. The chart below helps illustrate<\/a> just how many homeowners may find themselves in this situation:<\/a><\/p>\n

Those homeowners need to remember their needs<\/a> may matter just as much as the financial aspects of their move.<\/p>\n

Misinformation in the Media Is Creating Unnecessary Fear<\/strong><\/h4>\n

Another thing that\u2019s limiting inventory right now is the fear that\u2019s been created by the media. You\u2019ve likely seen the negative headlines calling for a housing crash, or the ones saying home prices would fall by 20%. While neither of those things happened, the stories may have dinged your confidence enough for you to think it\u2019s better to hold off and wait for things to calm down. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl<\/em>, says<\/a>:<\/p>\n

\u201cIn the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.\u201d<\/em><\/p><\/blockquote>\n

That\u2019s further limiting inventory because people who would make a move otherwise now feel hesitant to do so. But the market isn\u2019t doom and gloom, even if the headlines are. An agent can help you separate fact from fiction<\/a>. <\/p>\n

How This Impacts You<\/strong><\/h4>\n

If you\u2019re wondering how today\u2019s low inventory affects you, it depends on if you\u2019re selling or buying a home, or both.<\/p>\n