How Supply and Demand Can Impact Your Buying and Selling Goals
In today’s housing market, there are far more buyers looking for homes than sellers listing their houses. Based on the concept of supply and demand, this means home prices will naturally rise. Why is that? When there are more people trying to buy an item than there are making that item available for sale, that drives prices up. And that’s exactly the case in today’s housing market. So, knowing what’s happening with the inventory of homes for sale and the demand for housing is crucial for today’s buyers and sellers.
INFLATION, LENDING & COVID-19
Earlier and higher than expected increases in lending rates would pose the most significant downside risk to housing markets.
There is significant uncertainty in the economy, as the impact and duration of ongoing supply issues in the market are unknown and somewhat dependent on further disruptions caused by COVID-19. At the same time, energy prices are expected to rise. Higher energy costs, along with longer-than-expected supply disruptions, could result in higher-than-expected inflation.
Persistent and higher-than-expected inflationary pressure would not only impact the cost of living, but could also cause an earlier and higher increase in lending rates. This would pose the most significant downside risk to housing demand.
HOUSING SUPPLY
Should the housing market take longer to return to balanced conditions, we could see stronger than expected price growth.
Supply levels are expected to improve relative to demand. However, renewed confidence in the energy sector, plus new industry growth, could result in stronger than expected housing demand.
If housing demand remains persistently strong and building delays and costs continue to increase, the housing market could take longer to return to balanced conditions, causing stronger-than-expected price growth in the resale market.
As a buyer with fewer options available, you’re likely to see more competition, so you need to be strategic to win. First, make sure you have a trusted professional on your side. Your real estate agent will help you understand your local market and work with you to act quickly when the time is right. Even when it’s challenging to find a home, you can still succeed as a buyer today if you have a trusted advisor on your side every step of the way.
Bottom Line
Whether you’re a homebuyer, seller, or both, knowledge truly is power. Let’s connect today so you can better understand what’s happening in our local market and achieve your homebuying and selling goals this year.