Is the housing market close to a tipping point?
Kristi Bailey 2020 NETAR President
Inventory has joined price as a closely watched housing market item. What’s on the market has been steadily declining since 2013. It moved to shortage status late last year, but a silver lining to that cloud is developing.
Early this year, Realtor.com® surveyed potential home sellers and found that more than a quarter – 26 percent – said they planned to list their home within the next three years. While that may seem like a long walk up to resuming more balanced market conditions, NETAR’s monthly active listing tracking notes a baby step toward it. The active listings total has been flat since February.
“In a typical year, we see about 8 percent of the nation’s homes hit the market, and we’re expecting about 25 percent more this year,” says George Ratiu, senior economist at Realtor.com®. “This signals that many homeowners who were wary to list during the pandemic are getting ready to do so, and this much-needed inventory—especially for starter homes—will begin to relieve buyers’ challenges in a very competitive market.”
The small local active listings increase this year doesn’t come anywhere close to Mr. Ratiu’s projection. May was up 5.3 percent from April. Still, April and May were the first month-over-month increases in the last 17 months.
New listings in the local affordable housing zone – $180,000 to $250,000 – have also seen small increases. Active listings in that price range totaled 130 at the beginning of the year. It has steadily increased every month. The May count was 215.
According to the survey, many homeowners remain hesitant to sell because they fear they won’t find a new home within their price range. Some are also not selling because they aren’t sure where they want to move; the current economic climate; the logistics of buying and selling at the same time; and concerns about showing a home during the pandemic. That fits the local market like a glove.
Most homeowners who say they plan to sell in the next two to three years said that they would be more likely to list their home sooner if they knew they could buy and sell perfectly, according to the Realtor.com® survey. Also, 37% said that if they knew they could make a lot of money on their home sale, that also would be a motivator to list sooner.
“With home prices at historic highs, now is a great time to sell a home, and many first-time sellers might be surprised to learn how much equity they have,” says Rachel Stults, deputy editor for Realtor.com®. “For consumers who are worried about the stress and planning involved, there are a number of resources available to help with everything—from perfectly timing buying and selling to removing the hassles of doing repairs and staging.”
The takeaway from Realtor.com’s survey, which mirrors many local conditions, is the market could be nearing the correction tipping point for more balanced conditions. That’s expected to increase in the upcoming fall and winter seasons. It’s a slow but encouraging shift for first-time buyers and those looking for affordable housing, and they can best prepare by partnering with a local professional Realtor® and developing a strategy that will let them move quickly as new listings are made.
Conditions may be improving, but don’t expect the competitiveness to change quickly.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee – Southwest Virginia region representing over 1,400 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, Trends Reports, and the regional market analytics can be found on the NETAR websites at https://netar.us/voice-real-estate-northeast-tennessee.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us