The homes sell rise since the Financial Crisis
New data suggests Americans may be facing the toughest housing market since before the financial crisis. Zillow’s latest Real Estate Market Report shows homes selling faster than any time since 2010. Year over year since June, there are 4.7% fewer homes for sale, and homes now stay on the market on average a week less. With such an inventory crunch, buyers have less choice and time to make important real estate investment decisions.
The report illustrates that the supply of housing, particularly affordable entry-level housing, is simply not keeping up with strong demand. The lack of inventory is impacting first-time buyers as well as existing homeowners seeking an upgrade.
The median number of days a home stayed on the market dropped to 78 this June, down from 86 the same time last year. Seventy-eight is also well below the historic average of 111 days on the market since the beginning of 2010. Cities with the biggest year-over-year change in time homes stayed on the market since June included Charlotte (70 days), Pittsburgh (97 days) and Philadelphia (98 days), decreasing more than two weeks since last year.
Although perhaps against intuition, the housing situation isn’t fully optimal for all homeowners looking to sell. Despite attractive home prices that may lure sellers to enter the market, homeowners are backing away over fear that they will not find a new, affordable home quickly and without a riskybidding war.
Many homes are therefore listed on the market one day, with deadline offers just a few days later. The solution to such an inventory crunch relies heavily on how many sellers enter the market, given that buyers remain plentiful due to low mortgage rates and a steady job market.
The Bottom Line
Today’s competitive housing market resembles the housing bubble before the financial crisis in 2009. Until the supply of housing increases, particularly affordable entry-level housing, it will remain a difficult market for those seeking a home in the U.S. Given the market conditions, wherein an inventory crunch leaves buyers with only a few days to decide on a home, it’s vital that buyers and sellers enter the market prepared to move quickly with a clear sense of their financial limitations and priorities.
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