Given how competitive the home buying market is right now, it’s a question that’s on every home buyer’s and seller’s mind: how long will housing inventory be low?
The reality is that whether you’re searching for a home because you’re upsizing, downsizing, relocating or simply longing to settle down in that perfect neighborhood you’ve been eying—inventory is the #1 challenge (followed closely by rising prices!).
How low IS the housing inventory?
This July there were nearly 45% FEWER listings than in July of 2020. That’s a remarkable fall off. Homes in July were on the market for an average of just 7 days!
The housing inventory—that is, how long it takes before our market runs out of homes—is just 0.8 (so maybe 2-3 weeks). What’s more, you have to get up above the $1M-home category before you reach a full month of inventory.
By contrast, a more desirable level is in the 5-6 month range. That’s generally considered good because it’s competitive enough to encourage home appreciation, while keeping the housing market affordable.
Why is the housing inventory so low?
There are many reasons, but here are three main factors:
- Our area saw a major slowdown in building after the 2008 economic downturn. That slowdown (almost a halt), lasted roughly 3 years… and we never caught up.
- The pace of people moving here as well as young adults staying here and needing homes of their own, contributed to demand continuing to rise.
- In 2019, a number of indicators across the building industry (nationwide) had experts predicting that there would be a slowdown in 2020 as well.
As we now know, those predictions were significantly off! 2020 was a boom year for home buying, an eye-opening one for due diligence money, AND for moving from urban to more suburban settings.
There’s no getting around it: inventory is hard to come by! So how long will inventory stay low? While we may see some progress over the coming 12-24 months, the reality is that it took years for us to get into this situation, and it will likely take years to get fully out of it.
The good news is that there’s plenty of room for expansion both within and on the periphery of the Wake County area. So needs will continue to be met… gradually.
And will home prices continue to rise?
The general consensus is that prices will continue to rise into the middle of next year, but that the pace of those increases will slow down. Here are several reasons:
- Building continues to boom in Wake County, which will be a helpful factor: in Cary and Fuquay-Varina, new single-family home permits are up over 140%—and that number leaps to 235% in Garner.
- Building-supply problems that caused mayhem last year and early this year are settling down again, which will help new construction. And some of the major employers moving in are doing so more on the periphery of Wake County, which will draw more new buyers to explore surrounding counties.
If you’re currently a homeowner wondering if you should cash in now while the market’s hot, that’s also good news for your home appreciation—and you shouldn’t feel desperate to sell.
Bottom line: we’ll likely see a continuing hot market, compared to the rest of the nation, but we may see things cool to a simmer over the next few years.
And how long will housing inventory remain low? Quite a while… which is why it’s more important than ever to choose experts, like the team at Alexy Realty Group, to help you find and secure the home of your dreams. Give us a call today!