What Could Bring Better Inventory to the Housing Market?
Small changes in interest rates can have a big impact after such a long period of unprecedented low rates for house mortgages. Part of the runaway seller’s market effect has been these interest rates, but an even bigger issue has been low inventory available in particularly hot markets.
When there aren’t enough homes to sell to the interested buyers, a few negative things happen. It may seem like a real boon for sellers, who get above-asking offers, but it can also be a downside for them and their hardworking agents. When buyers are too cutthroat, they may place an offer before they are fully committed to the house just to get any offer accepted. This can result in deals falling through later on in the process, such as after an inspection, wasting everyone’s time.
So what levers do top real estate agents expect to potentially loosen up the tight inventory of our current housing market? Well, it turns out there are a few ways that inventory could grow, resulting in more options for buyers and more well-thought-out offers for sellers.
Fear of Missing Out = FOMO
In general, slightly upturning interest rates are making everyone who was on the fence about selling take notice. They may not be super excited to sell, but when faced with the possibility of plateauing or dipping sale values, they may make it happen. Customers who were hesitant to sell during the height of COVID because of uncertainty about the future are now uncertain about whether such high prices and competitive offers can possibly last. Getting into the market before the interest rates get up to 4%, agents have surmised, is a priority for quite a few folks who don’t want to lose out on the high seller’s market prices.
People With Elsewhere to Go Want to Sell To Actualize Gains
A more specific group that have been popping into the market now are folks who either have multiple properties or have been considering retiring and downsizing anyway. Often, selling a larger home with a higher price tag can be more challenging in a buyer’s market, so getting out of a large house and into something more affordable and small is a priority. For folks who can work remotely still and only have a few years before retirement, the ‘retirement move’ is happening early.
Under-30s Considering Cashing Out And Renting After a Few Years of High Growth
Finally, a variety of agents have seen young homeowners, people who have been in their homes for as little as 3 years, seeing selling their homes as a viable strategy. After years where some homes have appreciated 13% or more, twenty-something year olds are seeing a way to sell their home, cover their closing costs, and still net five figures of “profit” on the purchase. For people who were renting until fairly recently anyway, the idea of leaving their homes and going back to renting in exchange for a payout of this size was worth the hassle of selling and moving, especially given the weight of student loan debt on many people of that generation.