3 Reasons I Think Housing Inventory Will Pick Up Before the End of the Year

Buyers may have more options in just a few months.

There's a reason sellers have had a distinct upper hand in the real estate market for months on end. The market has lacked inventory in a very notable way. And that lack of inventory has resulted in countless bidding wars that have driven home prices up.

A lack of inventory has also given sellers more leeway to put less effort into marketing their homes and catering to buyers. During a normal housing market, sellers generally have to agree to a home inspection to get a home under contract. But over the past year, many buyers have been willing to waive their right to an inspection just to get a chance to purchase a home.

But once housing inventory picks up, things are likely to change to buyers' benefit. And there's reason to believe real estate inventory will, in fact, increase before 2022 comes to an end. Here's why.

1. Mortgage rates are rising and could climb even more

Last year, it was possible to sign a 30-year mortgage at under 3%. Right now, buyers are looking at paying more like 5.5% to close to 6% on a 30-year loan. And there's a chance mortgage rates could climb even more in the coming months.

If rates reach a truly unappealing level, it could push buyers out of the market. And that's something sellers are apt to know about. As such, some sellers might choose to get ahead of that problem by listing their homes during the final quarter of 2022 -- even though the fall and early winter generally aren't the most popular times to sell.

2. Sellers are worried about a recession

Economists have been sounding recession warnings for months on end. If an economic downturn hits, some buyers might be forced to put their homeownership plans on hold in the absence of being employed and being able to qualify for a mortgage.

Just as sellers are aware that mortgage rates are on the rise, so too are they likely aware that economic conditions could sour later this year or early next. And so they might list their homes in the coming months in the hopes of getting ahead of that situation.

3. Pandemic-related uncertainty may finally be behind us

Many sellers held off on listing their homes in 2020 and 2021 due to fears and uncertainty related to the pandemic. But while COVID-19 hasn't gone away, a lot of people are learning to coexist alongside the virus. Plus, we have tools, like vaccines and treatments, that are widely available to help mitigate the virus's dangerous effects.

As such, pandemic-related uncertainty may finally no longer be a factor for sellers. And that alone could fuel an uptick of near-term listings.

We're probably not looking at a huge increase in real estate inventory between now and the end of the year. But is it reasonable to think that housing inventory will pick up somewhat? Absolutely. And if you're a buyer, that's very good news, as it means you might not only enjoy having more homes to choose from, but also, more negotiating power.