In today’s housing market it is harder than ever to find a home to buy. It’s not just Frisco and Prosper that are experiencing a shortage of listings, but everywhere across the region and the entire country for that matter.

Ask anyone that has been searching for a home and you will hear similar stories of frustration. Homes are receiving multiple offers within days of being listed, bidding wars are common, and emotions are running high. Current market conditions have caused many potential buyers to either postpone their home search or give up completely until the market settles down.

So what exactly is going on? Why is housing inventory so low, and when is this likely to change? To learn more about how we got here and what we are likely to see in the months ahead continue reading below or watch the following video;

A year ago, before the health crisis began, we were beginning to see increasing signs of a shortage of homes for sale as an increasing number of millennials reaching prime home-buying age, and record-low mortgage rates, added to already strong demand.

When the pandemic hit, the initial belief was that demand for housing would drop off which would give supply a chance to start to catch up. What actually happened was the exact opposite. As restrictions from the initial lockdown began to be lifted what we found was that demand had actually increased while sellers were nowhere to be found. Faced with uncertainty, and not wanting potentially infected strangers walking through their homes, sellers pulled back with many delaying their plans to sell. Danielle Hale, Chief Economist at realtor.com explains:

“With buyers active in the market and seller participation lagging, homes are selling quickly and the total number available for sale at any point in time continues to drop lower. In January, as a whole, the number of for sale homes dropped below 600,000.”

While the number above represents the total number of for sale homes in the country, realtor.com also releases new data every month showing the year-over-year change in existing inventory by state. As you can see on the map below, inventory in Texas is 44.5% lower than it was at this time last year;

In both Frisco and Prosper the drop in inventory is even more severe as both markets have approximately 75% fewer homes for sale this year compared to last. With that in mind, it should come as no surprise that days on market are also down about 70%. The average days on market is currently between 14 and 21 days. Keep in mind that the average is based on homes for sale in all price ranges. Days on market for homes under $600k is commonly under a week.

Does this mean homes aren’t being listed right now?

Not at all. There are new listings coming on the market every day. In fact, the number of listings coming on the market right now has actually increased recently. The problem is that these homes are going under contract before they can even be counted as inventory. It’s very similar to when everyone was looking for toilet paper and disinfecting wipes last year. The rate of home sales, for both new construction and resale homes, can’t keep up with current demand.

The same realtor.com report I referenced above goes on to say;

“Time on the market was 10 days faster than last year meaning that buyers still have to make decisions quickly in order to be successful. Today’s buyers have many tools to help them do that, including the ability to be notified as soon as homes meeting their search criteria hit the market. By tailoring search and notifications to the homes that are a solid match, buyers can act quickly and compete successfully in this faster-paced housing market.”

So what does all of this mean if you are in the market to buy or sell?

For buyers

There is no doubt this is one of the most challenging markets I have experienced for homebuyers in the past 20 years. Saying that homes continue to get listed and go under contract every day. There are a few things that you can do to increase your chances of finding a home;

• Make sure you understand all of your financing options. Work with a lender and get pre-approved before you start seriously looking for homes

• Be clear on what you want and where you want it to be. We have the ability to create unlimited property searches for clients that can be specific to neighborhoods, school districts, one-level homes, homes with pools, etc. I’m not suggesting you try and cover every option and feature, but the more specific your search the less filtering of property listings that don’t match your search needs to be done

• If hoping to buy within 90 days, have instant property alerts created for you. Many times, when you register for property alerts on an agent’s website those alerts will go out monthly, weekly, or daily. However, as it gets closer to the time you are looking to move have the alert frequency changed to instant. That means you will be notified right away when a property that matches your criteria hits the market giving you a headstart over other buyers.

• Are you open to new construction? Many buyers don’t realize they can utilize the relationships agents have with new home sales consultants to learn about upcoming phase releases and homes that might be coming back on the market. This isn’t a guarantee that you will be successful but can give you an advantage over the competition

The good news is that we expect more inventory to come on the market later in the year. The downside to waiting is that prices continue to go up and interest rates are expected to rise. Saying that, ultimately you need to do what’s best for you and your family, but work with your agent to put a game plan together to help you navigate current market conditions.

For sellers

One of the biggest fears most sellers I have spoken to recently have is ending up with nowhere to go. The last thing a seller wants is to sell their home and not have a place to move into. The second fear is leaving money on the table. Why sell now when the market is still appreciating?

With regard to not having a place to go. That is a situation we deal with every day. The truth is it doesn’t happen as often as you might think it does, even in today’s market. Here are a few options to consider;

• If you are considering buying new construction then many builders will allow you to put a new home under contract contingent on the sale of your home. This provides you breathing room and allows you to list your home for sale closer to when the new home is scheduled to be completed.

• Leaseback your current property. Many of the buyers in today’s market are currently in a rental property and have some flexibility with regard to moving dates. You might be able to complete the sale of your existing home and stay in your home for an additional 30, 60, 90 days, or more while you complete the purchase of your next home.

• Obtain a bridge loan. Considering home prices have been rising for the past decade most homeowners are sitting on a tremendous amount of equity. Depending upon your financial situation there are lenders that will provide a bridge loan. A bridge loan is a short-term loan that will allow you to tap into your current equity in order to complete the purchase of your new home. Once you are moved and your current home is sold the bridge loan would be paid off at closing.

To answer the other question, why sell now when prices are still appreciating? The goal of the vast majority of sellers I have worked with is to sell for the most amount of money in the shortest amount of time. That is best accomplished when demand for your home is high. Considering inventory is expected to rise later this year your home will have more competition as more homes are listed for sale. The more listings there are on the market the less chance of having multiple buyers interested in your home and days on market will also increase. That doesn’t mean you should rush into selling if you’re not ready. Work with an agent to help you put the plan together that best helps you achieve your goals and objectives.

Bottom Line

Today’s housing market is definitely crazy but keep in mind these conditions won’t last forever. Whether you are looking to buy or considering selling, an important first step is putting together a plan that best helps you achieve your real estate goals. I’d be happy to help you do that without any pressure or obligation. Schedule a Call with me today!