Why Is Housing Inventory So Low?
Are you considering moving in the current Kansas City housing market? If so, you might wonder: Why is it so difficult to find a house to buy? It might be tempting to wait until you have more options, but that’s likely not the best strategy. Why?
The shortage of homes for sale isn’t just a problem in the current market. It’s been a challenge for years. Let’s look at some of the long-term and short-term factors contributing to this limited supply.
Underbuilding Is a Long-Standing Problem
One of the main reasons inventory is low is due to a lack of built homes in recent years. The graph below shows new construction for single-family homes over the past five decades, including the long-term average for housing units completed:
For 14 consecutive years, builders didn’t meet the historical average of construction homes (shown in red). This underbuilding created a substantial inventory deficit. While new home construction is back on track and is meeting the historical average, it does not mean the long-term inventory problem will be solved overnight.
Current Mortgage Rates Create a Lock-In Effect
In addition, several factors at play in the current housing market are adding to the inventory challenge. The first of these factors is the mortgage rate lock-in effect. Some homeowners are hesitant to sell because of the recent mortgage rates. They don’t want to move and assume a higher rate than the one on their current home. The chart below helps demonstrate just how many homeowners may find themselves in this situation:
Those homeowners need to remember their needs matter just as much as the financial aspects of their move.
Media Misinformation Is Creating Unnecessary Fear
Something else limiting inventory right now is the anxiety created by the media. Have you seen negative headlines predicting a housing crash or stating home prices would fall by 20%? While neither happened, the reports may have damaged your confidence. Perhaps these stories convinced you it’s better to hold off and postpone until things calm down. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, says:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”
This fear further limits inventory because homeowners who would otherwise make a move now hesitate. Even if the headlines are doom and gloom, this is not an accurate representation of the current market. Our real estate experts at Just Say Home KC are equipped and informed to help you separate fact from fiction.
How Does This Impact You?
Are you wondering how today’s low inventory affects you? This impact depends on whether you plan to buy or sell a home.
For buyers: A limited number of homes for sale means you’ll want to consider all your options, including different areas and housing types. Our realtors will help you explore what’s available and find your ideal home. Not only can they coach you through casting a broader net to expand your search, but our Just Say Home team is deeply connected in the Kansas City area and know of homes not publicly listed on the MLS!
For sellers: The current limited inventory offers incredible benefits. Your house will stand out. Our JSH real estate agents can explain why selling in these conditions is incredibly worthwhile. Moreover, since many sellers are also buyers, our team is also a crucial resource to help you stay updated on the latest homes available for sale in the Kansas City area. We’ll help you find your next dream home!
The low supply of homes for sale isn’t a new challenge. Many long-term and short-term factors have led to the existing inventory deficit. Are you looking to make a move in the Kansas City area? Our Just Say Home experts will explain how limited inventory impacts you and how to navigate the current housing inventory.