Should We Expect an Inventory Increase in the Housing Market This Winter?

 

Everybody wants to know... should we expect an inventory INCREASE in the Housing Market this winter?  Let's find out! 

Welcome to another Braceland Homes REAL ESTATE MARKET UPDATE. I’m Erik Braceland with Braceland Homes here in sunny San Diego, California, where we guarantee the sale and/or purchase of your home.  Here on the Braceland Homes channel we cover topics related to buying and selling residential real estate, and trends happening across the housing market.  

To kick this off I want to address a question that's been top of mind for many of us.  Is this housing market returning to normal?  A recent Wall Street Journal article asks "will real estate ever be normal again?"  Probably a better question to ask right now is, "will real estate ever return to normal?", because the housing market is still anything but normal.  I want to talk about what we're likely to see relative to those thinking about listing their homes.  

If we go back and look at a normal market, when do homes normally start to appear in greater quantities in the housing market?  In a normal housing market, we would say in the spring selling season of April, may, June.  But again, this year is anything but normal, and I want to make that clear. In this market, it's going to be this winter where we begin to see an increase in home listings.  It going to be those home sellers that been thinking about selling, waiting for the right time, that finally say "this is it!"  There have been a conclusive number of surveys that show a high percentage of home owners are saying that now is the right time to sell a home.  So I want to break that down for you here, and share some very interesting information from the national association of realtors.

I'll start with this quote from the folks at the national association of realtors.  They say "home sellers have historically moved when something in their lives changed – a new baby, a marriage, a divorce or a new job...but the pandemic has impacted everyone, and for many this became an impetus to sell and make a housing trade."  So normally life events drive our major decisions, and shape our lives.  Your dream may have been to live in a condo downtown and enjoy all that lifestyle includes. Then BOOM!  Along comes this pandemic.  Then suddenly your dream is NOT to be downtown with all those other people in such close proximity.  Perhaps now your dream is to move to the suburbs, or even the mountains, and put a little more distance between you and your family and everyone else out there.  Now a lot of people made a lot of decisions about housing for a lot of different reasons over the last year or two, but its safe to say the pandemic drove a lot of those decisions rather than life events.

In that same report that continue on to say " the pandemic likely spurred occupants to shorten their home stay, as tenure in the home decreased to eight years to ten years, according to the report.  This is the largest single-year change in home tenure since the national association of realtors began collecting such data".  I'm going to share a visual of that, but I just wanted to explain that most of us in the industry, and even many of you have always been taught to believe that the majority of people move every five or six years.

As you can see here from 1985 until 2008 folks were indeed staying in their homes for an average of 6 years.  Post 2008 you can see the average tenure of homeownership began to climb from six years to seven, eight, nine, and even ten years more consistently in the last few years with an average tenure of 9.2 years from 2008 to 2021.  Lots of different reasons for that, but now in 2021 you see this drop down to only 8 years.  Very, very interesting.  Couple of things here, and I'm not suggesting that a single year constitutes a trend.  What I am saying, is that there a lot of people that have been living in their homes for a decade or longer. I'm saying there is a lot of pent up demand for home owners to sell and change their living situation.  Perhaps they have been unable to sell for any number of reasons, including, but not limited to, not having adequate equity available in there home to sell for a profit or to break even.  Now they do have that equity, and the rapid price appreciation we've seen this year has been the driving factor in that for many home owners.  And that brings up a great question for you home owners.  Do you know how much your home is worth given the recent home price appreciation?  

I do have some opinions on how to find out in this video titled "27 Home Selling Tips To Sell Your Home Fast And For Top Dollar"

 But if we start to look at the different factors we've been discussing recently, including the increased importance and emphasis on the concept of home for people, and the increased tenure in those homes, that all lends itself to the scenario where folks begin telling themselves that now IS the right time to make a move.  Let's take a look at this quote from realtor.com "the pandemic has delayed plans for many Americans, and homeowners looking to move on to the next stage of life are no exception.  Recent survey suggest the majority of prospective sellers are actively preparing to enter the market this winter."  Pretty interesting.  All the research that they're doing over there suggesting that the bulk of prospective home sellers are gearing up to market their homes over the next several months.  Now we know in a normal housing market, sellers, over the last decade or two, have typically taken these winter months to prepare for those spring home sales.  But it looks like many sellers are going to jump off this winter and say "now is the time".

We see here that of those sellers that plan to list this winter, 93% have already taken steps toward listing their home, including working with an agent.  65% have already listed their homes for sale or plan to during the winter months.  36% have researched the value of their home and other homes in their neighborhood.  These folks have also begun making repairs and started the decluttering process.  So many homeowners getting ready to sell right now.  How about you?  Have you thought of selling your home?  Do you know what to do to get everything ready? How about buying a home?  I know some of you will be looking for you first home, and others  will be looking for a replacement home?  This market is creating great opportunities for any and all of those options.  I recently got a comment from a viewer on one of my videos comparing my optimistic perspective on the real estate market, as a real estate broker, to big tobacco trying to sell the consumer on the benefits of smoking.  While I appreciate that viewer's perspective, I will continue striving to always show you the silver lining to the housing market, because there always is one.  At the end of the day, unless you are making a long distance move to another area of the country with a much differently priced housing market, your home purchase or sale is going to be impacted very minimally by what the housing market is doing at any particular time.  Most of us are making a move within the same city so if you sell high, you'll buy at those same inflated home prices negating any real gain or loss.  The same goes in the other scenario.  If you're buying for the first time when the market is high, even if you end up selling when the market is low, chances are, you'll also be buying that next home when the market is also low.  Much more important than what the market is doing at a certain time, is if the time and circumstances are right for you and your family to make a move.  Determine what you want and need, and then find a competent professional that can help you make it happen!  If you're with me on this, consider subscribing to our YouTube channel so we can stay positive, and focused on our accomplishing our real estate goals together.

Alright, let's see what this report has to say about the top reasons folks plan to sell their 8homes this winter.  37% say their home no longer meets their needs.  Maybe they've started working from home, so now they need an office.  33% have realized they want different home features after spending more time at home.  Perhaps they want a gym to work out in at home to keep from going stir crazy while working from home, or to avoid the crowds at 24-hour fitness.  32% want to move closer to friends and family.  Along with home, I believe the pandemic has also made family much more important and more of a priority to many of us.  And finally, 23% are looking for a home office.  I guess I jumped the gun on that when covering the home features, but it's clearly a thing. Many of us shifted to working from our homes on a permanent basis because of the pandemic.  So again, many home owners ready to sell real soon, and these are some the top reasons driving those decisions along with record high home equity.

What's happening with current active home listing activity?  We can see here that housing inventory is still well below what its been over the last five years.  You'll see on top the more normal housing market years of 2017, 2018, and 2019 where housing inventory gradually climbs starting in the spring, peaks over the summer, declines during the fall, and then finally flattens out during the winter months. Last year we have a pretty steady decline as the pandemic wreaks havoc and sellers pull their homes off the market.  What a mess!  Then this year we start with a relative bang, but total housing inventory is still way below even what it was last year.  Now that housing inventory has flattened out, and I predict it will continue to grow.  Ideally inventory numbers will continue to grow for you home buyers so we can get out of this auction effect environment that we've grown accustomed to in many housing markets including my own San Diego real estate market.  As we know, there is no shortage of home buyers out there which is great for you home sellers.  I really do believe we are in for a bit of a leveling of the playing field with increased home listing activity in the near future, so watch for that.

Looking at the most recent data, the chief economist at realtor.com says this, "on a positive note, new listings this week were higher than we saw at this time one year ago, the first uptick in eight weeks."  Again, we are starting to see more home listings come to the housing market.  More folks are contacting us here at Braceland Homes every week for assistance with their home sales and purchases, and that's just another indicator that things are poised to take off this winter, so don't get left out in the cold.