In today’s housing market, it seems harder than ever to find a home to buy. This is a national trend – and Schuylkill and Berks County real estate is not immune to the problem.
Before the health crisis hit us, there was already a shortage of homes for sale. When many homeowners delayed their plans to sell at the same time that more buyers aimed to take advantage of record-low mortgage rates and purchase a home, housing inventory dropped even further. Experts consider this to be the biggest challenge facing an otherwise hot market while buyers continue to compete for homes.
As 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.”
In our area, we are seeing unprecendented LOW inventory. Selling is about the ratio of buyers to sellers that creates opportunities. Selling when the fewest number of homes are available to buy is what puts sellers in the driver’s seat. With today’s high buyer traffic and low inventory, this power combination makes now the optimal time to sell – before your neighbors put their homes on the market. Here’s how it breaks down.
High Buyer Demand
Buyer demand is strong right now, and not showing any signs of slowing down. ShowingTime, which tracks the average number of buyer showings on residential properties, recently announced that buyer showings are up 64.1% compared to the same time last year. They went on to say:
“All but one of the top 20 markets with the heaviest buyer traffic recorded double-digit showings per listing in September, well above the current U.S. average of six showings per listing.”
In the second-half of 2020, the housing market surged with activity. As Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), notes:
“Home sales in 2021 are expected to rise by around 10%. Home prices will also climb, but I expect more moderate increases than we’ve seen, a break for first-time buyers. Mortgage rates will continue to be favorable, staying at or near historic lows of 3% on average. The labor market will strengthen, especially as vaccines become widely available and life moves toward normal.”
NAR says this: “Total housing inventory at the end of totaled 1.07 million units, down 6.4% from November. And down 23% from a year ago.” What we talked about, 1.39 million units. Unsold inventory sits at an all-time low of 1.9-month supply at the current sales pace. Down 2.3 months in November, and down from the three-month figure recorded in December 2019. NAR first began tracking this in 1982.
So, what are they saying? Going all the way back to 1982, we’re at the lowest point that we’ve tracked active inventory. To put real numbers to this, there are about 320,000 less homes on the market today than there were at this time a year ago. In Pennsylvania alone – there 45% less houses for sale right now in 2021 than there were on the market in 2020. Wow.
While today’s historically low mortgage rates are expected to remain low, they won’t be this low for much longer. This could be the last chance for homebuyers to secure such a low rate, and they’re ready to act. In a recent article, Bankrate explained:
“…expect mortgage rates to remain low into 2021. However, the possibility of rates falling to 2.5 percent or lower has faded as the U.S. economy has rebounded.”
To bring this home locally, take a look at the trend lines in the chart above. The blue line is number of months of housing inventory for sale in Schuylkill County for the past 5 years, and the red line is Berks County. In 2016 there was 7.5 months of supply in Schuylkill, which dropped down to 1.22 months in February of 2021. It’s under 1 month in Berks.
If you are looking to sell – now is the time. NAR says that as the vaccines roll out and sellers are more comfortable with people coming through their houses, more listings will come on the market. Take advantage of the lack of competition and list now, if you are thinking of selling in 2021, rather than later in the year.