Recently, there has been an explosive increase in demand for housing within the United States. However, real estate inventory has not grown to accommodate these needs. This has left many people in a difficult situation that they aren’t sure how to navigate out of.
Let’s explore what this means for both buyers and sellers.
The Pandemic Played a Huge Role
For those who are unfamiliar, the pandemic was a major contributor factor toward the current state of the country’s real estate market. This is primarily due to the fact that more people than ever before are working remotely.
In the past, people tended to reside in cities that were in close proximity to their jobs. Now that they can work from wherever they want, they are beginning to explore other options.
However, there is an additional factor at play here. Those who work currently remotely also typically manage to keep their previous salary. For companies that are based in states with a high cost of living, workers can relocate and have extraordinary buying power in different regions of the US.
People Are Relocating to More Desirable Areas
As previously mentioned, someone’s job often dictated where they lived. This doesn’t mean, though, that people enjoyed living in a specific location simply because they were able to secure a job there.
A primary example is that people are navigating out of New York City toward surrounding areas like Garden City NY and Wantagh NY. However, this is also occurring all throughout the country. People are leaving the high cost of living areas (such as California and New York) and relocating to areas with a lower cost of living (such as Texas and Florida).
This created a unique situation unlike any that the US real estate industry has seen before. There is a large influx of buyers with a significant amount of buying power entering markets that simply do not have enough real estate inventory to accommodate.
There are plenty of scenarios where a homeowner will list their house on a sales platform. Within days or even hours, they will typically receive multiple offers from different buyers; Some of these being tens of thousands of dollars above the asking price. Unfortunately, this has led to major conflicts within the regions where this is occurring.
More often than not, local buyers simply cannot compete with those who are coming from out of state.
Investors Are Purchasing Many Properties at Once
This occurrence has created a similar effect as the one out-of-state buyers are responsible for. Typically because those who purchase investment properties only wish to rent them out to tenants. Thus, these houses are effectively removed from the market permanently.
At the very least, they won’t go back on the market for years. In regions of the United States that are particularly popular, such as Miami, there are very few homes available to families who need them. To make matters worse, house prices are expected to rise over the next couple of years.
This spike in house values has caused significant disruption for those who were getting ready to buy.
What Does This Mean For Me?
Depending on what situation you’re in, this will have a different impact on your life. More specifically, you may or may not be able to benefit from this occurrence.
Let’s take a look at how you should handle both of the primary scenarios at play.
For those who are looking to purchase a home in the current market, there are certain factors that you need to consider. Primarily, it’s essential to understand that you will likely need to offer above the asking price for a particular home. This is simply due to the fact that buyers have been consistently doing so across the entire country.
This means that the seller is unlikely to accept your offer. Why? It may be significantly lower than the others they receive. Given the current real estate climate, it may be in your best interest to rent a property while you save money for a larger down payment.
If you are determined to purchase a house, you might need to buy a starter home instead and plan on upgrading it over the next few years.
Those who are looking to put their home up for sale will be pleased to know that it is a seller’s market.
Homeowners have a significant amount of leverage when it comes to the prices they can set and the offers they will receive. However, selling your home simply because its value has spiked recently may not be the best idea. There is no telling when home values will stop increasing, and it may not be as sustainable as many people think.
If you are looking to sell your home, it’s best to get in touch with a reputable real estate professional. This is particularly true under the above circumstances. You could end up dealing with nuances that would normally not be present during a real estate transaction.
The Real Estate Inventory Shortage Can Seem Intimidating
This is especially true for buyers.
Even those who own a house are reluctant to sell the property since they know how difficult it will be to find another house to move into. However, the above information about the real estate inventory in the US will help you make the decision that is best for you and your family.
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