One question that’s top of mind if you’re thinking about
making a move today in Long Beach or North Orange County is:
Why is it so hard to find a house to buy? And while it may be tempting to wait it out until you have
more options, that’s probably not the best strategy. Here’s why.
We have not bounced back from the fever pitch selling of the post pandemic era yet. Please know that the shortage of homes for sale started way before the pandemic, home sale prices however, jumped during and right after the pandemic - settling down with the rapid increase in interest rates. With that said, the inventory dilemma started years ago. Let’s take a look at some of the long-term and short-term factors that have contributed to this limited supply.
Underbuilding Is a Long-Standing Problem
One of the big reasons inventory is low is because builders haven’t been
building enough homes. Building virtually stopped in 2008 with the collapse of the home selling market. It has yet to fully rebound to accommodate the number of people and families looking to buy a home. The graph below
shows new construction for single-family homes over the past five decades, including the long-term average for housing units completed:
For 14 straight years, builders didn’t construct enough homes to meet the historical average (
shown in red). That underbuilding created a significant inventory deficit. And while
new home construction is back on track and meeting the historical average right now, the long-term inventory problem isn’t going to be solved overnight.
Today’s Mortgage Rates Create a Lock-In Effect
There are also a few short term factors at play in today’s market - especially in the higher-end neighborhoods of Long Beach and Orange County. The first is the mortgage rate
lock-in effect. Many homeowners that I've spoken withare reluctant to sell because of where
mortgage rates are right now. They had the opportunity to lock in an historic interest rate a few years ago and they've become extremely comfortable with the monthly payment/savings. The feel very reluctant to move and take on a rate that’s 2x or higher than their existing mortgage rate. The chart below helps
illustrate just how many homeowners may find themselves in this situation:
Those homeowners need to remember
their needs may matter just as much as the financial aspects of their move.
Misinformation in the Media Is Creating Unnecessary Fear
Another thing that’s limiting inventory right now is the fear that’s been created by the media. You’ve likely seen the negative headlines calling for a housing crash, or the ones saying home prices would fall by 20%. While neither of those things happened, the stories may have dinged your confidence enough for you to think it’s better to hold off and wait for things to calm down. As Jason Lewris, Co-Founder and Chief Data Officer at
Parcl,
says:
“In the absence of trustworthy, up-to-date information, real estate decisions are increasingly being driven by fear, uncertainty, and doubt.”
That’s further limiting inventory because people who would make a move otherwise now feel hesitant to do so. But the market isn’t doom and gloom, even if the headlines are. An agent can help you separate
fact from fiction.
How This Impacts You
If you’re wondering how today’s low inventory affects you, it depends on if you’re selling or buying a home, or both.
- For Long Beach and Surrounding Area Buyers: A limited number of homes for sale means you’ll want to seriously consider all of your options, including various areas and housing types. Give me a call and we'll explore what is on the market in your ideal neighborhood(s) and find the home that best fits your needs.
- For Long Beach and Surrounding Area Sellers: Today’s low inventory actually offers incredible benefits because your house will stand out. I will gladly walk you through why it’s especially worthwhile to sell with these conditions. And since many sellers are also buyers, I can also be an essential resource to help you stay up to date on the latest homes available for sale in the ideal neighborhood(s) you desire so we get you into your next dream home.
Bottom Line
The low supply of homes for sale isn’t a new challenge. There are a number of long-term and short-term factors leading to the current inventory deficit. If you’re looking to make a move, let’s connect. That way you’ll have an expert on your side to explain how this impacts you and what’s happening with housing inventory in our area.
