With 2023 now here, it's essential to understand the current state of the real estate market. 2022 brought us sky-high prices fueled by historically low rates, which we saw rise towards the end of the year. Though increasing mortgage rates do typically mean lower home prices, continued inventory shortages indicate prices won't drop too much in 2023. Inventory shortages can significantly impact the real estate market. Therefore, potential homeowners need to know what this means for them and their home-buying journey. Today we'll explore inventory shortages, their history, and their effect on today's housing market.
How has the inventory shortage affected home prices and sales volume across the country?
The nationwide inventory shortage of homes in 2022 has had major implications across the country-especially on the prices and volumes of homes sold. Amidst this inventory crunch, home bidding wars have become increasingly fierce, with competition driving up costs tremendously. In some regions like San Francisco and New York, home prices have seen an impressive increase averaging around 5%.
On the other hand, home sales volume has also increased significantly, but at a slower rate than price increases due to the finite availability of homes on the market. This trend is indicative of how competitive the market can be when supply does not meet demand.
Are there any other factors that could be contributing to the inventory shortage issue nationwide?
Experts report that new home builds have never fully recovered from the Great Recession of 2007-2008. They peaked in 2005, reaching the highest level since the 1970s, but dropped to an all-time low following the recession. Recovery has been happening on a very slow scale, and with the impacts of the pandemic in 2020 on supply, the home building took further hits.
What does this all mean for buyers in today's market - should you wait or take action now?!
Buying a home in the current market can seem challenging with high-interest rates. However, it is also ideal for a savvy homebuyer to get off the fence and take advantage of a cooling market. With supply levels already low, as they often tend to be during periods of high-interest rates, waiting any longer could lead to further limitations on an already compromised housing market and even higher costs for prospective buyers. For those in the market for a new home, now is definitely the time to act up before prices rise again.
Pro Tip: A great way to curb the high-interest rates is to lock in a mortgage with a fixed rate.
In sum, the inventory shortage has been a major factor in housing prices and sales volume across the country. While this can be challenging for prospective home buyers looking to purchase new construction homes in 2023, it's important to remember that now is an ideal time to take advantage of this situation.
At PresGroup, we pride ourselves on keeping up to date on market fluctuations like fluctuations in inventory. We can help you stay informed and market to your potential home buyers why purchasing a home with you is the right decision. Call or email us today to learn more on how we can help your business thrive through these unsure times.