The one challenge for the housing industry heading into this winter is the dwindling number of available homes or sale. And what does this mean to you if you are planning on buying or selling a home Connecticut and the SOUTHBURY, CT home area.
Through all the challenges of 2020, the real estate market has done very well, and purchasers are continuing to take advantage of historically low mortgage rates.
Realtor Magazine just explained:
“While winter may be typically a slow season in real estate, economists predict it isn’t likely to happen this year…Low inventories combined with high demand due to record-low mortgage rates is sending buyers to the market in a flurry.”
Winter Real Estate Market Challenge
However, one challenge for the real estate industry heading into this winter is the dwindling number of homes available for sale.
Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), recently said:
“There is no shortage of hopeful, potential buyers, but inventory is historically low.”
In addition, Danielle Hale, Chief Economist for realtor.com, notes:
“Fewer new sellers coming to market while a greater than usual number of buyers continue to search for ahome causes inventory to continue to evaporate.”
Months Of Supply Of Available Homes For Sale
One major indicator the industry uses to measure housing supply is the months’ supply of inventory. Which is the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.
Historically, a four to six months of supply is considered a normal balanced real estate market. Going into the pandemic, inventory was already well below this mark.
As the year progressed, the supply has was reduced even further. Here is a graph showing this measurement over the last year for Connecticut:
You can see inventory was at 5.6 months last October in 2019 in Connecticut. Then dropping going into the winter. Which is a normal trend around that time. Inventory was low heading into 2020 but increasing steadily which is normally what you would typically see going into the spring market and summer.
Inventory dropped again during the health crisis and then started increasing once again into the summer months. Now inventory has now decreased even lower than last year at this time to a 3.4 month supply at the end of October in Connecticut.
What does this mean if you’re a buyer?
Be patient during your home search. It may take time to find a home you love. Once you do, be ready to move forward quickly. Get pre-approved for a mortgage, be prepared to make a competitive offer from the start, and understand how the shortage in inventory has led to more bidding wars. Calculate just how far you’re willing to go to secure a home if you truly love it.
What does this mean if you’re a seller?
Realize that, in some ways, you’re in the driver’s seat. When there’s a shortage of an item at the same time there’s a strong demand for it, the seller is in a good position to negotiate. Whether it’s the price, moving date, possible repairs, or anything else, you’ll be able to ask for more from a potential purchaser at a time like this – especially if you have multiple interested buyers. Do not be unreasonable, but understand you probably have the upper hand.
Let’s Talk Today
The housing market will remain strong throughout the winter and heading into the spring. Know what that means for you, whether you’re buying, selling, or doing both. Let’s talk today to accomplish your real estate goals here.
I am committed to the real estate market to make sure you have all the information you need to make your next move. Review all the information I have put together for you. If you would like more information on any issues of concern as well please contact me. I look forward to hearing from you. Have a great day.