Real Estate Market Update: Housing Inventory on the Rise!

 

Since 2020, one of the biggest challenges in the real estate market has been low inventory.  The shortage of inventory is one of the reasons we have seen home values rise so much and remain high.

 

Why has inventory been so low?

 

Two reasons, in our opinion.  The first thing that caused low inventory was low interest rates from 2020 until around 2022/2023, when the Federal Reserve started raising them to cool inflation.  The rates were driven down in the two to three percent range.  The cheap money drove buyers out in record numbers to purchase homes.  There was no inventory because buyers were buying it faster than it could come on the market.  The second reason inventory has been low is that home prices/values are high, and the current interest rates are in the six to seven percent range.  Homeowners with mortgages with a rate in the three percent range have not been willing to give up those rates for the current rates.

 

What has changed to make inventory go up?

 

The bottom line is that buyer activity has slowed because of the cost of borrowing money.  Most buyers can’t afford the higher interest rates, so many have left the market.  This means houses are taking longer to sell, which is leading to a surplus of inventory.