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Amid the checklist of prospective homebuyers, you’ll find things like saving for a down payment, obtaining a mortgage, desired characteristics for their future neighborhood; one worry current buyers may not be aware about is low inventory. In a market where home prices are appreciating, the harsh reality that after saving for a home you may not be able to even find one you like is sobering.
There are many factors contributing to the difficult market: low inventory fueling price increases in cities like San Diego, Charlotte and Seattle where available homes fell by more than 27 percent in the last year; house flipping converting affordable homes into expensive ones; increases pricing families out of previously accessible neighborhoods—S&P/Case-Shiller reports home prices are 5.4 percent higher than just a year ago. Accessible mortgage rates have provided 2016 homebuyers with hope, but they will prove little help if there aren’t homes to buy.
This hope increased today as the Department of Commerce announced that housing construction rose 5.2 percent in February to a seasonally adjusted annual rate of 1.18 million homes, a five-month high. Housing starts on single-family homes also rose by 7.2 percent last month, marking the highest increase since November 2007.
This construction could provide much needed home availability for buyers, as well as cool down price increases that have until now been constant. Together with this good news however, the DOC reports that applications for building permits fell 3.1 percent last month, signifying a forthcoming drop in housing construction. Even though the active housing starts of February are exciting, they must be taken with a grain of salt and may ultimately fail to significantly impact the market and hopeful buyers.
These stringent buying conditions have forced homebuyers to get creative, with news outlets reporting some buyers leaving handwritten letters at homes they want to buy and even knocking on the door to express their interest to the current homeowners. Desperate times call for desperate measures, and the current market may be creating novel ways of obtaining your dream home. The most important thing you can do is be prepared to buy and alert to the latest listings; this way, when the right house for you goes on the market, you can be the first in line.
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