WHY ARE THERE NO HOUSES ON THE MARKET!!!???!!
It's the primary question that almost EVERYONE is wondering. Why is invetory down 90% from this time 3 years ago? The follow up question to that is how do I find a house in this market? Many people wonder how I've bought 4 houses in the last 6 months. Yes, these are investment properties, but the principles of how to find a house in this market hold true for both investors and non-investors. Continue reading to learn how you can find your next home!
Before jumping into the solution, it's helpful to understand the problem. Why are there no houses, what are some of the factors driving this shortage, and furthermore, what's driving up prices to heights that we've never seen in our life time?
The following 3 reasons are in my opinion, some of the biggest factors conrtibuting to todays housing shortage:
- Economic Uncertainty
- Homeowner Tenure
- High Demand
The first factor contributing to low housing inventory is Economic Uncertainty. This should come as no surprise to anybody between the pandemic and wars over seas, many people are simply chosing to stay put in their own home, rather than purchase a new home. This may seem contrary to what many have heard relating to a "hot" housing market, but I'd argue that people are moving in spite of low inventory, not because many others are selling and buying right now (*Redfin states that as of March, 2022, on-market listings are down 91% from this time 3 years ago!). This tendancy to not want to move is probably going to continue for a while as there is a war in Ukraine, rising interest rates, and rising inflation. All of this continues to lead to uncertainty and there's a large portion of the population that would prefer to just not make big economic decisions, such as buying or selling a house, in this type of economic climate. This in turn leaves us with less on-market supply.
The next factor is new home ownership trends. Redfin recently came out with a study covering the last 10 years. Back in 2012, people were staying in their homes for roughly 10.1 years, but as of 2021, it appears that homeowners are staying in their homes for roughly 13.2 years - almost a 30% increase! This means that there is less housing turnover and thus, fewer homes will hit the market. This I believe is another dynamic that will not change any time soon due to the market climate and economic uncertainty.
The third factor contributing to low housing inventory is the "hyper" high demand. Millenials are now the largest generational population on the planet, and many of these millenials are starting families and with that, many want to buy homes to support their growing families. So demand from millenials is super strong right now and it is likely to stay that way for the next 5-8 years.
The second piece to understand about home demand is the type of homes that people are buying. Aside from primary homes, "second" home demand is up 87%, yes, 87% from pre-pandemic levels! Wondering why it feels equally impossible to buy that dream mountain house or beach house that only 3 years ago cost half the amount that is does today...well that's why! Why is demand for a second home so high? Well there are a few factors at play. The first is that we're seeing a lot more people work remotely so they no longer have to be bound to the proximity of an office. The next is that people don't necessarily want to get on a plane and deal with travel to go on vacation, so many more people are opting to buy a vacation home that is within a days drive of their primary residence. The third reason is that many folks are jumping on the real estate investing train, and one way they are doing that is by buying houses that they can vacation at, but also rent out on Airbnb or VRBO when they are not using the home.
So what does this mean for today's home buyer?? It means that you NEED to consider finding an off-market property to buy, OR, you need to partner with a real estate agent who has strong experience in finding off-market deals.
Finding an off-market deal is not always easy, but it's also not rocket science. In the last 6 months, we've bought 4 off-market houses. 3 of these homes we purchased remotely as long term rentals, and the most recent is a home in Maine which we will use as a short term rental.
As an agent, I've begun using these same methods to help my buyers find an off-market home, so they have a fighting chance in today's market.
If you are a buy in today's market, I'd welcome the opportunity to work with you to find you your dream home, without the challenges or anxiety that comes when buying an "on-market" house!