When there is high demand and low supply, it follows that prices will increase - economics 101. Right now, in the housing market, this basic principle is playing itself out perfectly. Demand for homes reached the highest annual level since 2006, with 6.18 million homes sold in 2021, the largest number in 15 years. And demand won’t be diminishing anytime soon as experts predict that existing-home sales will reach 6.4 million homes this year. Additionally, mortgage rates are at record low levels, people aren’t selling their homes, and lumberyards have significantly decreased operations because of the pandemic. As a result, the housing inventory or supply is at its lowest number of the century, totaling 910,000 units, down from 1.06 million a year ago.
These key ingredients - record-high demand and historically low inventory paired with low mortgages rates - make the present ideal for sellers but quite the challenging time for realtors.
What Sellers Need to Do
One of the most fundamental rules of selling is to wait for high demand and limited supply; having these conditions allows the seller to maximize leverage when negotiating. Currently, people wanting to sell their homes hold all the cards. Without exaggerating, these homeowners have a rare opportunity, as this December’s home inventory was the lowest it’s been since January 1999. It is no longer advantageous to wait; this year is the most optimal time to list your home. However, before you put your house on the market, consider these four sales tips:
- Have a competitive sales price
- Keep a flexible closing date
- Be open for a leaseback (this will give you more time to find a home)
- Maintain minimal offer contingencies
What Realtors Can Do
While homeowners looking to sell are in an excellent position, many realtors are stressing out over the inventory lows – especially if they are more reactive to the market instead of proactive. Some real estate agents believe that monitoring market conditions is the key to success. This strategy can make one hyper aware of potential economic contingencies and outside threats but limits one’s ability to act despite the market.
The reality is that market conditions are relevant but not the key to consistent success in real estate. In fact, following the ebb and flow of the market can lead to limiting beliefs or superstitions, namely, that when inventory is low, so too should one’s productivity. The logic (though incorrect) goes that if there are fewer available homes, there are too many buyers, thus fewer transaction opportunities. Instead of sitting idle, realtors can stay productive and reach out to former clients to maintain relationships, prospect new clients, focus on listings and foster new skills whenever they have downtime.
Reminders for this Season
If you’re looking to sell your home, contact us today, and we can give you the tools, advice and resources you need to be successful. Moreover, for all those realtors concerned over the record low inventory, remember to worry less about the market and stay productive.