by Maurie Backman | Updated July 19, 2021 - First published on June 23, 2021
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Housing inventory has been sluggish. Will that continue?
There's a reason so many people have been frustrated this year in the course of buying homes -- there just aren't many to choose from.
In April, buyers were looking at a meager 1.1-month supply of available homes, according to RE/MAX. To compare, a more balanced housing market -- one that doesn't favor buyers or sellers -- has about four to five times that many homes available for sale.
One surprising thing that happened this year is that the usual influx of spring homes just didn't hit the market. Home listings are commonly sluggish in winter -- the weather is uncooperative and unpredictable, making it difficult to show off a property's curb appeal. That causes many sellers to wait until spring to list their homes. But this year, listings never picked up, and so inventory has held steady at record low levels.
It therefore begs the question: Will more homes hit the market this summer? Or will buyers continue to struggle?
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Listings have been sluggish for the past year due to a couple of reasons.
First, there was the pandemic. In fact, the pandemic is still with us, even though coronavirus cases have declined and vaccines are now widely available. But when we think back to just a few months ago, when vaccines were limited and more difficult to come by, it's easy to understand why some potential sellers didn't want to list their homes. To do so would've meant welcoming in prospective buyers before the protection offered by vaccines was widespread.
Now that a lot of people have gotten vaccinated, that particular barrier could be removed. And so that's one reason to believe that we may see an uptick in housing inventory in the next few months.
The second reason listings were sluggish for the first half of the year comes down to the state of the economy. While we started off 2021 with a jobless rate that was way lower than it was in April of 2020 (when unemployment reached a record high), things were still looking pretty shaky earlier this year.
But recently, there was a nice improvement in that regard, with May's unemployment numbers coming in much lower than April's and roughly twice as many jobs getting added. And now that there's less general economic uncertainty to grapple with, more sellers may get on board with the idea of uprooting their lives and listing their homes.
Without a crystal ball, we can't say for sure whether housing inventory will improve this summer. But it could pay to prepare for that possibility. You can do so by socking away some extra funds for a down payment on a home and paying off some debt to make yourself a more appealing mortgage candidate.
Right now, mortgage rates are very competitive, and they're likely to stay that way for the next number of months. If more homes hit the market, it could make the summer of 2021 a very good time to buy a home.
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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