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by Maurie Backman | Published on Oct. 21, 2021
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Talk about a drastic decline.
It's more than fair to say that 2021 has been a tough year to buy a home. And things are unlikely to change between now and the end of the year for one big reason -- low real estate inventory.
As of September, the national inventory of active home listings was down 22.2% compared to the previous year, according to Realtor.com. But even more shocking is that housing inventory last month was down 52.5% compared to September of 2019.
Whenever there's a shortage of a given commodity, its price tends to rise as demand increases. That's exactly what's been happening in the housing market this year.
Not only has low inventory made it difficult for buyers to find suitable homes, but it's also made it so home prices have risen to less affordable levels. In September, the national median listing price reached $380,000, which is an 8.6% increase from September 2020. And that's a 20.6% increase from September 2019.
You'd think that sky-high home prices would be keeping buyers away, but the opposite seems to be happening. In September, the typical home spent 43 days on the market, compared to 54 days in September 2020 -- and 66 days in September of 2019.
Until more homes hit the real estate market, we can bank on prices staying high. So if you're having a hard time finding an affordable home in today's market, you may want to bow out for a while and wait for inventory to increase.
When that will happen, though, is hard to predict. One major driver of low inventory over the past year has been the pandemic -- and the economic uncertainty it's caused. Unfortunately, the pandemic is far from over. The delta variant is still causing a surge in cases and delaying an overall return to normalcy. We don't know how long that situation will last, and until it improves, housing inventory could remain sluggish.
Also, we're about to head into the colder months, which generally means fewer homes hitting the market. It could be that housing inventory picks up during the spring, since that's commonly when we see an increase in listings. However, that didn't happen this year, so we don't know if it will in 2022 either.
Still, it could pay to sit tight and wait until the spring of 2022 (or beyond) to buy a home. Mortgage rates are likely to stay low until that point, and home prices may come down as more properties gradually hit the market. If you're not particularly desperate to move soon, waiting could save you money via a lower home price and mortgage payment to go with it.
If you're intent on buying a home in the near term and can afford one at today's prices, then by all means, go for it. But just know that you might struggle to find a suitable home, or one that's actually worth its price tag.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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