Spring always is the hottest season for real estate. So why is there still a shortage of inventory on the market? We have only a 1.5 month supply here in West Michigan right now
Last week, we were fortunate enough to hear remarks from Lawrence Yun, chief economist for the National Association of Realtors (NAR), at the Michigan Brokers Summit. Mr. Yun said this is the first-time ever "Middle America" has experienced a housing shortage. Until now it's been an East and West coast phenomenon. Factors behind it include:
- Homeowners are staying put in their homes longer than before (national average is 10 years).
- 79% of homeowners say they have no plans to move within the next five years, per a recent survey by BankRate.com.
- Investors swallowed up many homes during the 2006-2012 economic downturn, turning them into long-term rentals.
- Millennials are saddled with student loan debt and have a hard time saving up for down-payments.
- Income growth from 2011 to 2017 has been 15% vs. a 48% increase in home values during that time.
- Less land is available and more expensive for builders to develop.
- Many builders are targeting homes at higher price-points with bigger margins, rather than building "starter" housing under $275K.
- Sellers don't want to take the risk of having to rent if they sell their home and can't find a new one in the tight 30-60 window between contract and closing.
- Buyers are starting to get tired of bidding wars, lack of good quality inventory, etc. Some are opting to take a seat on the sidelines to wait things out.
Sitting out the market may not be a smart move, Mr. Yun said, as the present short-inventory is likely to continue for another full 2-3 years. He expects the rate of growth in home values to start tapering off 4th quarter of this year and then level out in 2019. Values here in West Michigan are up 4.1% so far this year, while we saw an 8.6% boost in 2017.
If you're ready to sell, we can help you get your home ready for market and project your closing costs and net proceeds. Give us a call today at 616-437-0209 to discuss how we can help you with your real estate needs.