Low housing supply has had sweeping effects on the market, sending prices skyrocketing (up 12% over the year) and making bidding wars the norm.
For single-family real estate investors, it’s created quite the challenge, especially with foreclosures banned and few distressed properties hitting the market.
Fortunately, it seems the shortage may be nearing its end -- at least according to industry experts. Let’s take a look at what the latest data says about housing supply and what investors can expect as we get further into 2021.
Where supply is headed
Currently, the nation has just a 1.1-month supply of homes for sale -- the lowest number on record and what could very well be the trough, as many experts predict a turnaround in the not-so-distant future.
It’s true: According to a recent survey of over 100 economists, inventory will start to grow within the next year. About 43% predict it will be in the second half of 2021, while another 26% say the first half of 2022.
Recent data backs this up, too. For the week of May 1, new listings were up 18%. To be fair, total listings are still down over 50% annually, but the market has seen steady increases for the last three weeks.
More listings should be coming, too -- at least if you listen to homeowners themselves. According to a survey from Realtor.com, a whopping 10% of all homeowners plan to sell within the next 12 months. That’s 25% higher than the typical year.
“It also underscores the fact that while many sellers have been sitting on the sidelines, wary to list their homes in a year marred by a global health pandemic, an economic recession, large job losses, and tremendous uncertainty, with the outlook looking much brighter in 2021, they are ready to act on their delayed plans,” wrote George Ratiu, senior economist at Realtor.com.
As far as when you can expect these owners to start selling, the majority say they’ll list their properties within the next six months. Homeowners in the Northeast were more likely to say they’ll list between seven months and a year out.
The bottom line
Housing supply may be strapped right now, but it won’t stay this way forever. If these surveys and recent data trends hold true, the market could be in for a much-needed supply fix just a few months down the line. This would likely ease pressure on prices and make finding that next investment property much easier (and more affordable).