According to a new report from Zillow, the U.S. housing inventory is about to reach crisis levels. This is because the number of available homes in some of the most sought-after neighborhoods has fallen for the third straight year, as of 2017. In fact, there were 10% fewer homes on the market as of December 2017, compared to December 2016.
Why Housing Inventory Levels Are Falling
Housing inventory levels are falling because more millennials, and even younger generations, are buying homes. Therefore, inventory is down, competition for homes is up, and homes are more difficult to find and buy.
“Aging millennials and young families may be able to find more affordable new homes for sale this year, but they’ll most likely be in further-flung suburbs with more grueling commutes to urban job centers,” said Aaron Terrazas, a senior economist at Zillow.
Terrazas goes on to add that more people feel comfortable looking for homes due to the tax cuts and the positive outlook for employment. At the same time, builders are having trouble keeping up with rising land and labor costs, as more people are looking for newer homes.
In some of the most expensive metro areas, there is an even greater chance of a housing shortage, where there can be up to 40% fewer homes for sale. Not only does this make it harder for people to move, but it makes it more likely that there will be increased competition.
“On the supply side, the market is starving for new homes, but it won’t be easy for builders struggling with high and rising land, labor and lumber costs.”
Tampa Housing Inventory
Tampa is one of the areas hit with housing inventory problems, as inventory sank 12.4% year-over-year.
Tampa has a home value index of $193,000 (8% increase from December 2016), and a rental value of $1,350 per month (1.3% increase from 2016).
However, for most people, purchasing a home is still a better option than renting.
Orlando Housing Inventory
Orlando has even more trouble with housing inventory levels than Tampa. With a home value index of $214,900 (7.8% increase from December 2016), and the year-over-year housing inventory level sinking 12.7%, Orlando is struggling slightly more than Tampa.
Also, just like Tampa, purchasing a home is still a better option than renting for the long run, because of the return on investment a homeowner is likely to see when selling a home.
The Right Mortgage Broker Can Give You a Competitive Advantage
In a competitive housing market with low inventory, it’s important to work with a mortgage broker who can give you a competitive advantage by doing a rigorous mortgage pre-approval, and close quickly with a low interest rate.
Homebuyers with a rigorous mortgage pre-approval from a well-known and well-respected mortgage broker have more credibility with Realtors and sellers, because they can have confidence that the buyer can close. No one wants to work with an underqualified homebuyer, because there is a probability that the deal will fall through, and everyone has wasted their time.
With a low interest rate, homebuyers same money on their mortgage. A low mortgage rate also allows homebuyers to be more competitive when making an offer, compared to a similar homebuyer with a higher interest rate.
Working with a mortgage broker who can close quickly is also very important. Sellers can save a great deal of money by closing before their next mortgage payment is due, and some sellers need to close quickly to buy another home already under contract. So, homebuyers who can close quickly can beat out the competition, while also buying the home for a lower price.
Marimark Mortgage serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.