Friday, August 13, 2021

Inventory Finally Showing Up

Inventory pressure is finally started to lighten up a little. New construction is booming but a labor and materials shortage is keeping things moving at a slower pace than demand. This of course puts pressure on the resale market as more sellers realize they have the upper hand. 

Most people have been sitting on their homes, perhaps the fear associated with the pandemic or the where will I go question that looms over many potential sellers. Whatever the underlying cause, the market is seeing a welcome bump in inventory.

That mentioned, we still have a low supply and multiple offers are still the typical situation on any home under $1,000,000 that is priced properly. So buyers you can't quite relax yet. The good news is that most analysts are still mildly to moderately bullish on real estate through the 2nd quarter of 2022. 

What might put the brakes on a roaring industry is inflation and potential rate hikes that typically arise during heavy inflation cycles. Projections for the rest of this year are almost "Jimmy Carter " levels of inflation. Buyers in contract now should have a solid 1st year of appreciation. I'd like to think the fed has learned how to keep interest rates in check but they still can't continue to pump cheap money into the economy. At some point rates will creep up.

Rates have been stupid low for several years now. It would be heathy to get back into more normalized rates in the 5's or 6%. That would trim a lot of buyers out of the market though. Getting in while rates are low and locked in on a 30 year at 3% is beneficial in a potentially rising rate economy.

There is a silver lining to the dark cloud hanging over buyers.

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