It’s been said so many times this year that it’s almost become a cliché, but there’s no doubt that across the country, a lot of Realtors are asking, “Where are the homes?”
Throughout the year, the U.S. housing market has faced an unprecedented challenge: soaring interest among buyers looking for a home, but confronting a market where the inventory is at historic lows. How could there be this much of a disconnect between sellers and buyers? Why are there not more sellers recognizing that it’s a great time to sell?
Now comes a new report by Realtor.com, its latest “Housing Shortage Study,” which offers some answers. The report notes that the U.S. real estate market is now experiencing the worst inventory deficit in two decades.
It’s become a particularly frustrating time for Realtors. Many of them are finding that it’s been a while since this many prospective buyers were contacting them, looking for help in finding a home – only they’re hampered by the lack of homes on the market and the very fierce competition for anything new that gets added to the MLS Listings.
Considering how strong buyer demand is, some real estate agents are likely wondering why more sellers haven’t jumped into the market to take advantage of these strong conditions.
One key solution would be for Realtors to reach out directly to builders like AV Homes, and form a long-term partnership with them, to introduce their clients to the new, move-in ready homes that AV has constructed.
If Realtors know they’re introducing their clients to homes being built by a company that maintains the highest standards for construction and design, it’s much easier for them to feel confident that they’re helping their clients.
So why is there so little inventory today?
The Realtor.com study cited two key reasons why inventory remains low. First, there’s a reluctance on the part of many in the Baby Boomer generation to sell, and second, a surprisingly large percentage of home owners seems to be happy in the house they now own.
Realtor.com based their findings on an online survey of 1,054 homeowners across the U.S. The survey, conducted in July, asked a series of questions with the goal of unlocking the root causes of the shortage of homes for sale.
The survey also found a major disconnect between Millennials and Boomers.
The results of the survey showed that:
* 59 percent of respondents said they were not planning to sell their home in the next year.
* 35 percent were planning to sell.
* 5 percent were unsure.
Among those planning to sell, a much greater percentage – up to 60 percent of them, in fact – were Millennials. They were split, according to the survey, between those who wanted to move into a larger home and those interested in homes with nicer features.
This is good news for the market, since Millennials are more likely than Boomers to be selling a starter home, which is among the most highly sought after in today’s market.
The supply of starter homes in the market was down 17 percent between July 2016 and today, while medium-sized homes were down by 10 percent and large homes down by 5 percent year over year.
But if Millennials are thinking about getting into the market, Boomers are more reluctant. The Realtor.com survey found that 85 percent of baby boomers indicated they’re not planning to sell their home in the next year.
Another disconnect appears to come from the fact that a much larger percentage of Boomers – 78 percent – are homeowners today, compared to millennials (41 percent.) So until more boomers decide to sell their homes, the inventory will stay low.
Among those boomers who are thinking about selling, down-sizing is a top concern, the survey noted.
So why are boomers not selling?
The survey offered a variety of reasons why people didn’t want to sell, including:
- Their current home meets the needs of their family (63 percent).
- They have locked in a low interest rate (16 percent).
- They just recently purchased their home (15 percent).
- They wanted to make home improvements first (13 percent).
- They have locked in low property taxes (13).
In other words, they’re happy, so what is there to compel them to sell?
How is the economy impacting the housing market?
Right now, the U.S. economy is not only very strong, but leading economic indicators suggest the good times are here to stay. A healthier economy means more people have jobs – and are looking for a home. So the buyers’ market conditions should stay high as long as the economy does.
The measure of how well the U.S. economy is performing climbed again in July, indicating faster growth is on the way during the final six months of 2017.
The leading economic index rose 0.3 percent in July, on the heels of an even stronger showing of a 0.6 percent increase in June, the Conference Board reported.
The National Association of Home Builders reported that confidence among U.S. builders in the market for newly-built single-family homes rose 4 points in August. The association noted that builders were encouraged by several factors, including:
- Increased buyer demand for new homes.
- Strong job and economic growth.
- Attractive mortgage rates.
- Higher consumer confidence levels.
How is Florida’s housing market performing?
In the second quarter of 2017, Florida had more closed sales, higher median prices and more pending sales, according to the latest housing data from Florida Realtors. The number of closed sales of single-family homes across the state was 79,888 in the second quarter, which is 3.7 percent higher than the 2Q 2016 figure.
Bolstered by a strong economy with an unemployment rate lower than the national average (4.1 percent in Florida in June, compared to the U.S. unemployment rate of 4.3 percent), Florida clearly is a destination state right now.
Pending sales for single-family homes rose 1.4 percent year-over-year in the second quarter as well.
The statewide median sales price for single-family existing homes was $240,000 in the second quarter, a 9.1 percent rise from the same time a year ago.
Not surprisingly, inventory remains a challenge in Florida as well, with buyer demand significantly outweighing available inventory. Florida Realtors, in fact, is encouraging prospective buyers to work with a real estate agent in their area, someone who understands the local market conditions and can navigate the complex world of buying and selling a home today.
Conclusion: The AV Homes Partnership
In this very strong market, prices are certain to keep rising. Now with reports indicating the economy could get even stronger in the final four months of the year, that seems even more certain to become true.
Florida Realtors reported that in the second quarter of 2017, the median time to a contract — or the midpoint of the number of days it took for a property to receive a sales contract — was just 39 days for single-family homes. This market is so strong that homes are selling at a rapid pace.
In this competitive environment, Realtors have an opportunity to work directly with builders like AV Homes, a company that understands there are a lot of buyers eager to get into newly built, move-in ready homes in some of the most attractive and appealing areas of Florida.
Our homes are built in places where people feel a sense of belonging, and of being part of a community. We have homes for people starting their first home search, and for people starting a new chapter in their life who want to relocate to a 55-Plus community.
Sit down with us and review the beautiful communities that we build, and we can demonstrate how AV Homes distinguishes itself by creating award-winning new home designs, made by a veteran team that maintains the highest standards of both design and construction.
If you’re a real estate agent in Florida feeling the pinch of the low supply of homes for sale, contact us today at 1-800-AVHOMES to learn more about the homes we build and the communities we build them in. We can work closely with you to match your clients’ interests with our own inventory.