Buying a home in today’s housing market can be a difficult task. With low inventory, it can be difficult to find a property that meets your needs, and with high prices, it can be difficult to find a property that you can afford. It can be especially hard to buy a home when the housing market is low on inventory and prices remain high. In this blog post, we will discuss why it is so hard to buy a home in a low inventory and high priced housing market.
What does Low Inventory Mean?
Housing inventory is a term used to describe the total number of homes that are available for sale on the market at any given time. Low inventory means there are fewer homes available which tends to cause higher home prices. When inventory is low, it’s common to see homes immediately getting offers and having lots of competetion. This can be especially true in areas where demand for housing is higher due a growing workforce or new city developments. Low inventory often leads to competitive bidding wars that drive up home prices even higher.
The Causes of Low Inventory
What caused this record setting low inventory market? Let’s find out:
Lack of New Construction Homes
Record Low Interest Rates
Corporations and Investment Companies Purchasing Property
Sellers Are Hesitant to List Their Home
The Effects of Low Inventory on Home Prices
When housing inventory is low, it can have a huge impact on home prices. Increased competition has caused home prices to go up as more buyers compete for fewer homes. Sellers are holding out for a higher price than would normally be accepted. With fewer homes available, they know they can command higher prices or an Offer with few to zero contingencies. This can be especially difficult for first-time buyers who are looking for an affordable home but find that the market is too expensive. High home prices are not only detrimental to potential buyers, but can also cause issues of value in the future when the market evens out.
The Difficulty of Buying a Home in A Low Inventory Market
The following are a few reasons why it can be difficult buying a home in a low inventory market:
High Home Prices
The lack of available homes can make it difficult for buyers to find the right home at a price they can afford. When there is low housing inventory, home prices tend to rise as there is more competition among buyers. This puts many potential buyers in a tough spot as they are faced with high home prices and no homes to choose from. Buyers who need to move quickly may find themselves with no choice but to buy a property they can’t necessarily afford, or with no home at all.
Short Offer Window
This low inventory market has caused properties to receive Offers within 1 day of listing. The lack of housing inventory also means buyers have less time to shop around for the best property. With fewer properties on the market, buyers have less time to compare prices and make sure they are getting a property for what it’s worth. In some cases, they may find themselves in a bidding war for a home, further driving up the price, removing contingencies that protect themselves, and competing for a less than ideal home.
Frustration
Low housing inventory can be frustrating and intimidating for buyers, and can even lead to buyers giving up altogether if they can’t find the right home. With fewer properties to choose from and high home prices, it can feel like an impossible task to find the right home at the right price. It can take months to a year, or even longer, to find a property.
