INVENTORY SHORTAGE: WHAT YOU NEED TO KNOW
We may have started a new decade, but last year’s biggest real estate concern is still singing the same tune. Inventory is at a near-historic low, while demand for homes continues to grow. Inventory Shortage’s can be frustrating for eager buyers and bring hesitancy to those looking to sell soon.
A normal market’s inventory sits at 6 months. Las Vegas currently sits at 2.6 months for December 2019 and January numbers haven’t posted yet. That number could drop lower. What does this mean? It means not enough homes to keep up with the demand of buyers. This is, in big part, due to millennials finally wanting to become first-time homebuyers.
The other speculated reason for housing shortage’s here in Las Vegas is because of the housing crash. Many investors came in and bought up tons of inventory at all time low prices, keeping them in their investment portfolio (rental portfolio). This means these rooftops may never come back to market, an estimated 10K to 40K rooftops. Builders can’t build fast enough or affordable enough to lure first time buyers.
Affordable homes continues to get further out of reach as average home prices continue to climb in to the $300K’s. Las Vegas is an affordable place to live, especially in contrast to high tax states, guess the secret is out! There’s also been a shift in when people are buying homes. Spring time has always been the traditional best time to list, get past the holidays, and then move, but not anymore.
For the past five years, buyers have been coming out earlier and earlier because of increased demand. Essentially, there is no such thing as a “buyer’s season” anymore. Those who think so could face a longer and more complicated selling process. While there is a small dip for the holiday season, many people continue to churn right through it buying and selling. All with only minimal impacts. Things such as a few more days on the market, slightly lower price point (within $1K-$5K) of market value, but often getting list market value price all year long.
With a currently low amount of homes coming to market, anyone thinking of listing is in a prime situation to sell. Most markets in the country are seeing record lows for days on the market, with many of the homes getting multiple bids and more than asking price (how to win a bidding war). On the flip side, waiting to sell could mean more competition and losing interested buyers to new construction homes.
The market is strong, values are up, and projections don’t see that changing anytime soon.
Buyers, on the other hand, are growing frustrated about the lack of new listings while sellers remain in the dark about when to put their homes on the market.
The lack of inventory travels across all price points but hits the first-time homebuyer market hardest. Which is a shame, because a recent report from Urban Institute reported that the earlier you become a homeowner, the better shape you’ll be in for retirement. Gen Z take note.
At the exact opposite end of the real estate spectrum, there is luxury real estate. 2020 predictions for luxury real estate sees an uptick in luxury real estate, with affluent renters being swayed by low mortgage-rates and increased buying power.
At just three weeks into 2020, it’s already looking like an exciting year for real estate.