Why is home inventory low at the moment?

Rental Property Investor · Wilmington, DE · Member since 2020 · 35 posts · 19 votes

I'm seeing and noticing a super low inventory in homes which is causing markets to become super competitive to a point where people are buying homes for above market value. I know the low rates have buyers seeking to purchase homes as well but my question is that if homes are being sold so frequently and some above market value or asking prices, why is the inventory so low? Just trying to get an understanding into how COVID can effect the inventory of homes.

5 Reply

100 views

Most Popular Reply

Dennis Cosgrave

Rental Property Investor · Member since 2019 · 304 posts · 462 votes

There are basically three reasons:

1) People have lost their jobs and do not qualify for a new mortgage if they choose to sell and repurchase.

2) People are still afraid of COVID and do not want strangers coming through their homes. They are delaying listing their homes until the threat has passed.

3) Because of the decreased inventory, prices have moved higher in desirable areas, or have moved significantly lower in the big cities (NYC is prime example). Sellers cannot sell in less desirable areas for their asking price and buyers are being priced out of the market in desirable areas.

11 Reply

See this reply in the discussion

49 Replies

Jump to latestLatest

Sort by

James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
6y
Originally posted by @Terry Harris:
Originally posted by @James Hamling:
I am a bit let down that nobody has pointed out the question to @Terry Harris of exactly how is "everyone" buying "at above market prices" when the very definition of Market Price is the amount for which something can be sold in a given market?
Above market price = not selling, selling = at market price, selling fast & for more than listing = below market offering.
So your actual question and issue is why are homes selling for more than you think they are worth, correct?
Wow, never looked at it like that! Thank you for the insight. And yes that should be the actual question.

And going a step further, I have noticed many persons speaking recently of the housing market in terms as if housing value are a static measure across time of which the market can over or under price. This is incorrect on every level.
Real Estate is an asset, how one pays for it can adjust it into a liability but the property itself is an asset hence why it is a hedge against inflation, as all appreciable assets are. The vary nature of an appreciable asset is that it is a mirror of the state of inflation and the market economy. there in it will have a cyclical nature, just as does our economy, Bears & Bulls.
Once a person has enough time, experience comes comprehension of the underlying economic factors and the realization that REI is more a matter of timing, where in the cycle are things and what strategy/actions best fit.
Land-lording pre-dates the USA itself, as does the market cycles. To better understand the future one must first comprehend the past.

0 Reply
Jesse Morrell
Flipper/Rehabber · Tyler, TX · Member since 2019 · 58 posts · 41 votes
6y
@Terry Harris part of the scenario I heard is that the shutdown has slowed new construction also, which has affected inventories. Foreclosure inventory is also very low.
1 Reply
Jesse Morrell
Flipper/Rehabber · Tyler, TX · Member since 2019 · 58 posts · 41 votes
6y
@Terry Harris another reason is that a lot of moves are from people changing jobs or getting new jobs and the economic shutdown has really affected the job market, though unemployment is going down now.
1 Reply
Aigo Pyles
Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes
6y
The effect of covid 19.
1 Reply
Baha Acuner
Rental Property Investor · Chesterfield, VA · Member since 2016 · 23 posts · 5 votes
6y
Do you all think this will be a repeat of 2008? I mean 30 million jobs lost and we still have people buying like there is no tomorrow.
0 Reply
Serena Kim
Real Estate Agent · Orlando, FL · Member since 2019 · 59 posts · 90 votes
6y
@Terry Harris
In FL, now that people are getting a bit more comfortable with covid, I’m finally seeing properties come back to market. A month ago it was extremely hard to be a buyer, now you actually have houses to choose from, but competition for good properties is fierce. People are bidding with cash offers well above asking price, meaning there is still a strong imbalance of buyers vs sellers
1 Reply
Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Post Covid reaction and low interest rates.
1 Reply
Josh Nigh
Boise, ID · Member since 2017 · 50 posts · 64 votes
6y
@Robert M. I agree 100%. Unfortunately, raising taxes is always the answer. I hear Ecuador is nice.
2 Reply
Account Closed
Investor · Bakersfield, CA · Member since 2015 · 161 posts · 46 votes
6y
I would be interested to know if anyone on the thread is seeing differences in A class neighborhoods vs C class neighborhoods. In my area it seems like B and C class properties are selling fast with multiple offers, A class are slow, anything above $300K. Thoughts?
1 Reply
Gregory Chadwell
Real Estate Broker · Milwaukee, WI · Member since 2015 · 299 posts · 90 votes
6y
In the Milwaukee market there is an extreme shortage of supply versus demand many of the home sellers are afraid to have “infected people“ walk through their houses or the fear of it.
The inventory is starting to get a little bit better most houses received 10 offers and 10 K over doesn’t get the house anymore. Alot of the winning bidders are going cash with no inspection pretty challenging time for buyers agents
2 Reply
Franky Aikens
Wholesaler · Philadelphia, PA · Member since 2016 · 124 posts · 81 votes
6y
The country is trying to navigate a pandemic with extremely negative economic implications. Not the best environment to buy, sell, or build a home. Unless, of course, you subscribe to the Buffet school of thought and get excited when you see "blood in the streets."
What's a saying? "Never waste a crisis."?
0 Reply
Mason Ward
Real Estate Agent · Carlsbad, CA · Member since 2019 · 6 posts · 3 votes
6y
@Terry Harris
Here in North County San Diego we have low inventory, increasing home value, coupled with increasing buyer demand (because of extremely low interest rates). While looking for homes my clients and I were matched up against 36 other offers on one of the properties we toured. It’s a bit more competitive when looking for a home; however, there’s a few things you can do to position yourself well when submitting an offer.
-Signed PEAD forms
-Pre-approval from lender or other proof of funds
-Know exactly what property you are looking for
-Write a personal letter along with your offer
These are just a few ways to stand out NOW while we have low inventory.
1 Reply
Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
6y
Inventory has been low in Milwaukee before Covid; people forget that. The pandemic has accentuated an issue by effecting sellers much more than buyers.
When you look at the bigger picture you start to see:
1.) Millennials (known as renters for many years) became the largest segement of first time buyers and storm the market. Gen X will be next.
2.) Older folks live longer in their homes, so these homes don't hit the market as they used to - slower "turnover"
3.) Boomers stay put and remodel - they should be selling, but they don't
4.) We have not built much in the ten years from 2008 to 2018
3 Reply
Bob E.
Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
6y
This is not hard to figure out. But if politicians reduced barriers and housing became more affordable, then what would they run on for the next election? It's not about people, it's about power. We are all just stuck in the middle.
1 Reply
Victoria Lehman
San Francisco, CA · Member since 2015 · 2 posts · 4 votes
6y
I think it depends on where you are. My mom is a broker in Fairfield, CT and she's never seen so many enthusiastic buyers in her 15 year career. Young families are flooding out of NYC seeking yards, good schools, and more space. It doesn't hurt that interest rates are low and real estate investment seems wise pre-inflation. Inventory is low there because there's not as much of an impetus for people to sell. However, I'm in SF and inventory is high! Similar city outflow effect.
3 Reply
Calvin OzanickBusiness Member
Property Manager · Janesville, WI · Member since 2017 · 708 posts · 297 votes
6y
I also think part of the inventory dropping is because the market is condensed this year. People who intended on home shopping in spring were pushed into the summer market so 2x as many buyers are looking at deals. This then leads to buyers being forced to bid at houses that are competitively priced and those listings come off the market within days of being listed. I think what you are seeing is that the inventory listed is either listed too high or improperly listed. This is what is causing the low inventory.
Wisconsin Property Managers4.7414 Reviews
Website View Page
2 Reply
Jack Seiden
Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 656 votes
6y
Why is it acutely bad now, covid , long run zoning laws restrict multi family housing in most parts of most cities and most major metro areas have run out of farmland to build new housing on so there is not nearly enough land to build housing to keep up with population growth.
0 Reply
Phillip Davis
Rental Property Investor · Edgerton, WI · Member since 2017 · 86 posts · 35 votes
6y
Great subject and an interesting question. I think like with anything in life there are multiple factors contributing. I personally think a major factor we are starting to see the ramifications of the 2008 housing collapse. Many very good builders got wiped out and no longer in business, this caused new home builds to fall way off the previous paces. So the population has continued to grow and new construction decline since 2008 and we are starting to see the aftermath of all this. Once again not the only problem, combine all the other mentioned symptoms and you start to see the lack of housing.
1 Reply
Shannon Robnett
Developer · Boise, ID · Member since 2020 · 173 posts · 198 votes
6y
One answer that I do not see here is that we have been behind on new home construction since the great RE meltdown. Home builders all but stopped building new homes for several years and yet our population did not stop expanding. For the last 5 years we have continued to produce at a pace equal to 2005 but we have never been able to get caught up to pre 2008 inventories.
Check the data and you will see it has been a trend that all of the above comments validate this process becoming worse but the root can be found in the lack of homes produced from 2009-2013 era.
0 Reply
Joseph Weisenbloom
Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
6y
The lack of supply I get and understand. However I don’t understand where the demand is coming from. I would have figured housing demand would have fallen off a cliff. How can people even afford a house right now with 30% unemployment and paycuts galore? I would be more worried about not getting foreclosed on and getting robbed by the droves of methed out vagrants roaming the streets. I thought lending standards were tight as well? I don’t get it.
0 Reply
Cahla Downs
Real Estate Agent · North Huntingdon, PA · Member since 2019 · 7 posts · 2 votes
6y
Hello! I am a real estate agent in the Pittsburgh PA/surrounding area, and inventory here is low as well. We have lots of listings come up, but they are literally gone in a day with multiple offer sales. It's been great for sellers, but really frustrating for buyers....the escalation's are taking home upward of 20,000 the listing price, and buyers are just making multiple offers, often on several properties before getting one accepted. My thought is that in PA when they shut Real Estate down for three months, people panicked...and as soon as we opened up, they were desperate to move asap, in fear that it will be shut down again. Also, I have many many clients who after being quarantine in their home for such long time, have realized how impractical (either too small or too large) their current home was. In reference to how they can afford to buy, the jobs around here that have been shut down or mainly service industry. And besides the owners, most of those people were not in the position to purchase real estate before cover, and they are in the renter pool....not great for landlords...however we have had really few issues with that from our tenants so far. Most of the buyers I have are in unions, teachers and law enforcement, car sales, bankers, lots of retirees, and several the medical field (nurses and admin and sales, and they are very busy). Im anxious to see what happens going forward into the winter, and after the schools reopen. This is such a strange time, and I don't think anybody predicted the real estate market to boom so quickly!
1 Reply
Ben Thomasian
Redwood City, CA · Member since 2017 · 13 posts · 10 votes
6y
Originally posted by @Jaquetta T Ragland:
@Ben Thomasian good for you. I think the market is so good right now...even if you got a hotel for 1 week while your house is being shown, you’ll probably sell within that time and make enough money to pay for the hotel stay...if your house is in good shape.
Thanks so much, and I did just sell it, all-cash offer.

1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.