Shaheen, Ruth, Martin & Fonville Real Estate

8 Reasons we won’t have housing inventory Armageddon any time soon

Richmond Housing Market

Are we on the all-new crazy train, destined to crash off the cliff in a pile of short sales and foreclosures? Are distressed sales headed to your market? Is the bubble bursting? Do you feel confused and stressed yet? Us too. So let’s drill down on what’s actually happening, what it means, and what you should do.

Inventory is rising. The headlines say that the influx of active listings will drive prices down, reduce the velocity of sales and, consequently, wreck the market. This is indeed a logical argument since it was a major factor driving the housing crash of 2008-2009. Too much supply and not enough demand turned the tables from boom to bust back then.

It’s true that inventory has increased from an all-time low of 900,000 active listings in February 2022, up to 1.2 million listings currently. That’s an increase of 35.6% so far this year.

What does that really mean? Consider the fact that active listings peaked at 3.9 million in 2006. We have 2.6 million fewer than that peak. This time is not just like last time. It’s very unlikely that we will all wake up to a sudden increase of 2.6 million listings.

Why? Here are 8 reasons you won’t have inventory-armageddon any time soon:

  1. Don’t freak out. Higher inventory is not causing a housing crash.
  2. Do reach out to all of your buyer prospects and let them know that there are a lot more homes to choose from, they probably won’t be in a bidding war, they actually get to have a home inspection and they won’t have to pony up for the appraisal gap. How many of those prospects will return to the market now that it’s a bit more favorable toward buyers?
  3. What about interest rates? Who wants to buy a house when rates have gone up so quickly and drained the buying power? I’ll tell you who: cash buyers, relocating buyers, millennials and Generation Z buyers who are tired of paying inflated rental prices, investors, new construction buyers, and buyers who can still get a decent interest rate through buy downs or adjustable rate loans.

Knowledge equals confidence. Ignorance equals fear. Be the leader in this changing market and you’ll thrive, but you must be proactive. Each day, you are self-employed or self-unemployed, depending on how many people you find who need your help buying or selling real estate.

October 21, 2022, 9:56 am By Tim and Julie Harris

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