Why Is Housing Inventory So Low?

Why Is It So Difficult to Find a House to Buy Right Now?

If you’re contemplating a move in the current market, you’re likely wondering: Why are there so few houses available for purchase? While it might seem tempting to wait for more options to become available, that might not be the wisest course of action. Here’s the rationale behind it.

The scarcity of homes on the market isn’t a new phenomenon; it’s been an ongoing issue for several years. Let’s delve into the long-term and short-term factors contributing to this limited availability.

Chronic Underbuilding Adds to the Problem One major reason for the low housing inventory is the insufficient number of homes being built over the years. The graph below illustrates the trend in new single-family home construction over the past five decades, including the long-term average for completed housing units:

For a consecutive 14 years, the construction of new homes fell short of the historical average (indicated in red), leading to a significant inventory shortfall. Although new home construction has recently aligned with the historical average, the long-standing inventory issue won’t be resolved immediately.

Current Mortgage Rates Lead to a Lock-In Effect

Several current market factors are exacerbating the inventory challenge. One such factor is the mortgage rate lock-in effect. Essentially, some homeowners are hesitant to sell because they don’t want to assume a higher mortgage rate than what they currently have. The chart below demonstrates how many homeowners might be affected by this:

It’s crucial for these homeowners to remember that their personal needs could be just as important as the financial implications of their move.

Media Misinformation Fuels Unwarranted Concerns

Another contributor to the limited housing inventory is the fear perpetuated by media narratives. You’ve probably come across alarming headlines predicting a housing market crash or a 20% drop in home prices. While these scenarios haven’t materialized, such stories might have shaken your confidence enough to make you reconsider making a move. As Jason Lewris, Co-Founder and Chief Data Officer at Parcl, states:

“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”

This has further restricted inventory, as people who might have otherwise moved are now hesitant. However, the market isn’t as bleak as the headlines suggest. A knowledgeable real estate agent can help you discern fact from fiction.

How This Affects You

The impact of low inventory varies depending on whether you’re a buyer, a seller, or both.

For Buyers: The limited inventory means you’ll need to be open to exploring various locations and types of housing. A competent real estate professional can guide you through the available options and help you find a home that suits your needs. They can also assist you in broadening your search if necessary.
For Sellers: The current low inventory actually works in your favor, making your property more noticeable. A real estate agent can explain why selling under these conditions is particularly advantageous. And if you’re also looking to buy, the agent can keep you updated on the latest listings in your desired area, helping you find your next dream home.

The Bottom Line

The current shortage of homes for sale is not a new dilemma; it’s influenced by a variety of long-term and short-term factors. If you’re planning a move, let’s connect. Having an expert, like the ones at Countryside Homes NJ and RE/MAX Select, by your side will help you understand how this inventory situation affects you and what’s happening in your local housing market.

Client Testimonials for Countryside Homes NJ

At Countryside Homes NJ and RE/MAX Select, we pride ourselves on delivering exceptional service to our clients. But don’t just take our word for it—read what our satisfied customers have to say. From first-time homebuyers to seasoned real estate investors and new home builders, our clients appreciate our dedication, expertise, and commitment to their success. Here are some of their stories.

David R. New Homeowner

Collaborating with Keith LaBrunda and Heather Montalbano from Countryside Homes NJ and RE/MAX Select streamlined the home-buying process for me. They were attentive to my needs and preferences, ensuring they understood exactly what I was seeking in a home and what was within my financial comfort zone. Keith and Heather provided invaluable assistance during the offer stage, sharing insightful details that enabled me to place a successful bid on my desired property. They recommended associates to assist me with securing a mortgage, conducting home inspections, and acquiring homeowner's insurance. Post-purchase, they continued to be a resource, suggesting local companies to contact for internet, water, waste management, oil, and other essential services. The experience of purchasing a home with Keith LaBrunda and Heather Montalbano was seamless and enjoyable.

Rachel and Andre First Time Homebuyer

As first-time homebuyers, the process of finding and purchasing a home felt daunting. But from the moment we reached out to Heather and Keith at Countryside Homes NJ and RE/MAX Select, our worries were put to rest. Their team was incredibly patient, answering all our questions and guiding us through every step. They took the time to understand our needs and preferences, ensuring that we found the perfect home in a neighborhood we love. We were especially impressed by their vast knowledge of the local market and their commitment to ensuring we got the best deal possible. We can't thank them enough for making our dream of homeownership a reality. If you're in the market for a new home, we highly recommend Heather and Keith at Countryside Homes NJ and RE/MAX Select. They truly go above and beyond for their clients!

Prestia Family New Homeowners

From the moment we began our home search, Heather at Countryside Homes NJ and RE/MAX Select stood out as the epitome of professionalism and dedication. Her team's in-depth knowledge of the Rockaway Borough area and their unwavering commitment to our needs made our home buying journey not only smooth but truly enjoyable. As new homeowners in Rockaway Borough, NJ, we can confidently say that choosing Heather at Countryside Homes NJ and RE/MAX Select was the best decision we made. Her expertise, patience, and genuine care for our family's needs transformed what could have been a stressful process into a memorable and joyous occasion. We are beyond grateful for her support and would highly recommend her and her team to anyone looking to find their dream home. Thank you for turning our dreams into reality!