Low inventory is creating a huge impact on the real estate market.

Over the past few years, the real estate market has undergone significant changes. Mortgage interest rates experienced a sharp increase, going from below 3% to almost 7% at one point. The rapid price appreciation that characterized the market for some time began to taper off and stabilize.

Despite predictions of a home price crash, this has not occurred. Home prices have remained relatively steady, with the National Association of Realtors' chief economist, Lawrence Yun, stating that most areas will see minor changes in median home prices.

“The shortage in supply continues to push home prices upward.”

Although sellers might believe they need to lower prices to attract buyers, low inventory is now a major factor impacting the market. Yun further explains that the lack of inventory makes a 30% price decline highly unlikely. This is evidenced by the steady decline in inventory since 2011. This shortage continues to push home prices upward.

Bankrate explains that the persistent lack of inventory forces buyers to bid up prices, and the supply-demand dynamic prevents a price crash in the near future. Many homeowners have significant equity in their homes due to rapid price appreciation in recent years, which means we are unlikely to see a wave of foreclosures and short sales like in the early to mid-2000s. Sellers are currently unmotivated to sell, as they likely either purchased or refinanced their homes at low interest rates. Buying a new home would mean taking on higher interest rates. 

If you are considering buying or selling in this market, feel free to contact me at (269) 350-5514 or email me at sold@veenstrateam.com. I'd be happy to discuss the current market, inventory, prices, and mortgage interest rates, and help you develop a plan moving forward. I look forward to speaking with you soon!