We are seeing an unprecedented lack of housing inventory here in the state of Utah (as well as nationwide). According to the National Association of Realtors (NAR), across the country, inventory of available homes for sale is at an all-time low – the lowest point recorded since NAR began tracking this metric in 1982. Low inventory means higher competition for limited supply, and how does one simply compete with a full cash offer way above asking price?
People are fearful that another market crash lies in the horizon, but simply economic principles show us otherwise. Take a look back at 2007, we had the opposite problem we are facing today. A higher supply than demand caused home values to fall drastically. Right now home prices are rising at a substantial rate as an increasing number of home-buyers compete to purchase a limited number of available homes.
This is a great situation for those who own real estate—but makes homes increasingly unaffordable for first-time home buyers. Utah Government officials are working to reverse this unhealthy trend by encouraging development of high density housing. Cities and counties are seeking to make zoning ordinances “developer friendly” but it’s a long slow process, and they often face opposition from local citizens.
If you’re currently on the endless cycle of looking for a home in 2021 there is some hope. There are more homes expected to hit the market later this year. Below we will break down three key areas that we will most likely see a rise in home sales from as 2021 continues on.
2020 was a crazy year for all of us. Health concerns, rising unemployment, toppled with uncertainty of what was going to happen a lot of people decided to play it safe and not list their homes. I don’t blame them, none of us knew what lied ahead.
As vaccines are starting to be widely distributed and we reach towards herd immunity many potential sellers are becoming more comfortable with the idea of listing their home. We are seeing an improvement in the economy and sustainable progress against fighting the coronavirus.
More and more people are becoming comfortable with showing their house in person, while also having a better understanding of their financial situation ultimately leading to people having more security in life.
- More New Homes Will Be Built
2020 was a very strong year for home builders, and according to the National Association of Home Builders (NAHB), 2021 is expected to be even better. The NAHB expects ongoing growth for single-family construction, and that it will exceed 1 million starts since the great recession.
With the increase of production of new construction homes, homeowners looking for their dream homes will be able to meet their wish list and simply build their perfect home. When they sell their current home, it will create an opportunity for those who can not build a home to secure a move-in ready house. This will set off a simple chain reaction in motion for hopeful buyers.
- Those Impacted Financially by the Economic Crisis
Currently there are forbearance options available to help homeowners avoid foreclosures through the pandemic. However there is no definitive date of how much longer these grace periods will last, and people impacted financially will most likely need to move. Although experts are not expecting a large wave of foreclosures, those who have lost jobs might need to relocate for new career opportunities.
There are also many homeowners who didn’t take advantage of the forbearance option or were already in foreclosure situations prior to the pandemic. In these particular cases homeowners might decide to sell their homes instead of entering into the foreclosure process, especially given the equity present in homes today. Lawrence Yun, Chief Economist at NAR, explains:
“Given the huge price gains recently, I don’t think many homes will have to go to foreclosure…I think homes will just be sold, and there will be cash left over for the seller, even in a distressed situation. So that’s a bit of a silver lining in that we don’t expect a massive sale of distressed properties.”
There are many signs pointing towards an increase in the number of homes for sale in 2021. Large doses of the vaccine becoming available, new homes being built, and more listings coming to the market prior to foreclosures, there is still hope if you are planning to buy this year.
Housing demand is extremely high and supply is at an unprecedented low, so if you’re thinking about making a move there are likely many buyers out there who are looking for a home just like yours. And as listed above there are options coming for you to find a new house too. Contact us today to see how you can benefit from the opportunities available in the current Utah market.