Are you one of the people scouring the internet for the perfect house, driving around your favorite neighborhoods hoping to see a For Sale By Owner sign, stalking the “Coming Soon” house advertised and stressing out about what will be available on the market if you put your house up for sale?? Well, your predicament is real and you are not alone. Going into the spring market many parts of the United States are seeing the lack of inventory on the market waiting to see if the inventory will increase while we approach spring and summer, the busiest season of real estate. Is there a reason for the housing shortage? Have we created this perfect storm?
To some degree we have backed ourselves into a corner by correcting mistakes in the past, sometimes to the point of over kill, but what do you expect…we’re Americans, that is what we do.
After the housing crisis the real estate market came to a screeching halt. In recent years after the dust settled the economy was stimulated with interest rates less than 4%. Interest rates became attractive again, there was buying/selling, consumer confidence was up, lots of refinancing and an overall positive direction for the housing industry. Rates are now creeping up beyond 4%, no one wants to let go of their low rate and are choosing to remain in the home they currently live in. The Baby Boomers play a large role in this stand still. This large demographic is living longer, healthier and thanks to rising home prices these would-be downsizers can’t find smaller homes that cost much less than their current homes. So, there is no sense of urgency for them to move.
Another hurdle is that builders do not tend to build homes for the entry level buyer. The vast majority of new construction is for move-up products vs. entry level homes. Builders proclaim regulations on land restrictions, environmental regulations, infrastructure fees, neighborhood restrictions and the process for permits costs tens of thousands of dollars for each home….over kill, sounds familiar.
And lastly…the all mighty investor. People that rented their home made up 36% of households in the third quarter of 2017, up from 31% in 2005, according to the Census Bureau. Landlords do not want to sell: millions of homes were purchased by investors during the foreclosure crisis and rents continue to rise faster than home prices. Why would they want to sell?
As spring and summer approach our focus remains on Harford County, Baltimore County, Baltimore City, Cecil County, Anne Arundel County, Carroll County and Howard County. The supply and demand will affect prices, rates and will lead us into an unpredictable market for 2018.