If you’ve been thinking about selling a house or if you’ve been in the market to buy a house or if you’ve been paying any attention at all to the real estate market, you’ve probably noticed the housing inventory crisis that we’re in. Inventory is desperately needed to cool this overheated market. Now, to be sure, a market like this is great for sellers, but not so good for buyers. It’s very uneven.
So, here we’re going to get some insight into how long this inventory crisis may last. You’ll find out what it means to you as a for sale by owner and when might be a good time for you to cash in on your equity.
For the video version of what’s happening with the housing inventory crisis check it out on my YouTube channel, Sell Your House Yourself.
These inventory problems have been building for several years. Back in 2016, while the country was still pulling out of the 2008/2009 financial crisis, the housing market was getting back to its pre-recession levels. In 2018, a short 2 years later, as Realtors we started noticing there were less houses for sale. That continued getting worse until 2020 and into 2021 when inventory just became non-existent and that caused prices to go vertical. Housing prices have gone up 18% year over year according to some estimates.
What’s Happening Now?
But what’s happening right now with the inventory crisis? The good news for the health of the market in general is it seems to be easing, as you can see from this graph.
Zillow said back in their April report that;
In April and June, the housing inventory crisis was still pretty bad. New listings were getting multiple offers, many well over asking price. In some places like California numbers like $75,000 over. And even more. Buyers were offering to forego inspection contingencies. Buyers were making up the difference in appraised value to contract price in cash. It was crazy. There are still some hotspots around the country like Southern California, Seattle, Denver and some cities on the east coast but overall it seems to be easing…a little. In July, we have started to notice more houses coming on the market and less buyers.
The buyers, I think, are going away because they’re getting priced out of the market or they’re just throwing up their hands in despair and giving up. Many sellers are cashing in and turning to renting for awhile. That’s putting housing inventory on the market. Zillow says there are 32% more listings this June than there were last June. So we’re starting to see the market start to even out some. Without a doubt it still has a ways to go, but inventory is getting better.
The Inventory Crisis Wildcard
The wild card is going to be the mortgage forbearance program that was part of the Cares Act passed by Congress to deal with the Covid pandemic. Mortgage forbearance prevented homeowners that missed mortgage payments to be foreclosed on. Those that fell on hard times would not lose their house.
That was supposed to end June 30th. It was extended to July 30 and the request period to September 30th. The president is asking Congress to extend it again. Once that goes away, there’s a lot of people that are predicting a great big market crash. You can see all these market crash videos on YouTube. They’ve been coming out in force since 2017 then again in 2018, 2019, 2020 and even into this year predicting a housing market crash, the housing market crash. Well, eventually they’re going to be right, but I don’t think it’s going to be in 2021 or 2022.
The reason being, once the mortgage moratorium ends, there won’t be a huge amount of foreclosures 2009 recession style. A lot of people have gotten back to work now. The economy is improving and in good shape. Most people using the program are going to be able to pick up where they left off with their house payments. In most cases the missed payments will get tacked on to the end of their loan to be paid back when the house sells or is paid off.
Hopefully we’ll get some inventory out of the end of forbearance. No one wish’s anything bad on homeowners. We don’t want anybody to get foreclosed on, but there are going to be some people that are going to have some trouble. The housing market will more than likely see some foreclosures, which may bring the inventory levels up a little, help stabilize the market and ease the housing inventory crisis the country is currently experiencing.
What Should You Do Now?
So, if you’re thinking about or have thought about cashing in on the equity in your house now is a good time. If you do plan on selling to cash in on all that equity from these rapidly rising prices, make sure you have a plan. If your plan is to sell your house and then buy another house you may just be spinning your wheels.
Remember, it’s a great time for sellers, not so great for buyers. All that profit you make on your house will get eaten up with real estate commissions and the expensive house you buy. That’s OK if that’s your plan, just be aware.
I know there have been a lot of people that have sold their house because they just couldn’t turn down all that money from their equity. Many of those as aforementioned are renting now. But, rent prices have soared lately. Make sure you check rent prices in the area you want to live. If you do decide to rent keep in mind this housing inventory crisis won’t last forever.
Right now your almost guaranteed a good, if not fantastic, price for your house because we are in such a strong sellers’ market. If you’re not quite ready to sell you probably still have some time.
What’s Next For Housing
Analysts are expecting home prices to rise 6% to 8% into the end of 2021 and into 2022. It doesn’t look like there will be any big changes in the next year or two. So you still have some time according to the nation’s economists. While we have a pretty dramatic housing inventory crisis right now it does seem to be improving slowly. Nobody realistically expects the bottom to fall out anytime soon.
This is not a bubble. What it is, is a simple case of supply and demand. Not enough supply. Too much demand. That is what caused this housing inventory crisis.
Make/Save Even More Money
Whatever selling decisions you decide on, make sure you sell your house yourself to avoid those expensive real estate commissions. I’ll show you how to sell your home fast and for the most money.