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March 29, 2021

How Low Inventory is a Win for Sellers

Your Realtor keeps talking about "low inventory". Find out what that means in the housing market as well as why it can be great for sellers.

Real estate continues to be called the ‘bright spot’ in the current economy, but as we’ve established, there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale. The National Association of Realtors (NAR) explains:
“Total housing inventory at the end of January amounted to 1.04 million units, down 1.9% from December and down 25.7% from one year ago (1.40 million). Unsold inventory sits at a 1.9-month supply at the current sales pace, equal to December’s supply and down from the 3.1-month amount recorded in January 2020. NAR first began tracking the single-family home supply in 1982.”
According to NAR, right now, unsold inventory sits at a 1.9-months’ supply at the current sales pace. To have a balanced market in which there are enough homes for sale to meet buyer demand, the market needs 6 months of inventory. Today, we’re nowhere near that number. If this trend continues, it will get even harder to find homes to purchase, and that may slow down potential buyers. Danielle Hale, Chief Economist for realtor.com, notes:
“With buyers active in the market and seller participation lagging, homes are selling quickly and the total number available for sale at any point in time continues to drop lower.”
When looking at the maps from the NAR Realtors Confidence Index Survey, it’s clear to see that strong buyer traffic far outpaces weaker seller activity. In essence, many more people are interested in buying than selling, making it hard for buyers to find a home. When this happens, sellers have the upper-hand in the negotiation. Realtors are reporting an average of 3.7 offers per house and an increase in bidding wars, meaning the demand is there and now is the perfect time to sell for the most favorable terms.

Bottom Line

If you’re considering selling your house, this is the ideal moment to discuss how you can benefit from the market trends in our local area with a move this spring.

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