Demand for houses among buyers is reported to be rising rapidly, but while this is good news for the real estate industry the acute lack of inventory means that soon, we might not have enough suitable homes to go round.
The root cause of the problem, according to the New York Times, is that the housing turnaround seems to have happened so suddenly that pretty much everyone has been taken by surprise:
“As desirable as the long-awaited improvement may be, the unusually low level of homes for sale is creating widespread problems for buyers and sellers alike, leading to bidding wars and bubble-like price jumps in places that not long ago were suffering from major declines.”
With the situation as it is, home builders are scrambling to construct new properties to keep up with demand, but even here there are problems. Builders have been severely hampered by a lack of available building lots, a scarcity of qualified labor, and the difficulty in obtaining housing permits. These problems are compounded by the large number of investors operating today, snagging up the best short sales and foreclosures, further reducing inventories around many parts of the country.
Another reason for the dearth of available houses is that millions of homeowners still find themselves underwater, and therefore not in a position to sell. Even those that have returned to equity barely have their heads above water, and so millions more are waiting for further price rises before they can sell.
Carrie Miskawi, who has spent more than six months searching for a new home, told the NYT that those which are available have become subjected to intense bidding wars:
“You see a home go for sale and within a couple days there are three, four, six offers,” she complains.
In some parts of the country, realtors have reportedly even taken to knocking on doors of random homes to see if the owners will consider selling up.
All in all, the NYT estimates that the number of homes for sale is now at its lowest level since 1999. But unlike then, when conditions meant that buying wasn’t so attractive, today’s record low mortgage rates and the fact that home prices are still way off their peak means that greater numbers of buyers are looking for an opportunity to take advantage.