What is Causing the Inventory Shortage? | Monday Minute - May 3, 2021

If you are a buyer in the real estate market right now in 2021, you are most likely noticing the severe lack of inventory on the market.  And if you have been actively out looking, you have experienced the crazy competing offers and extreme escalating prices that are happening.And the question I get all the time, “What the heck?!”And then followed up by, “Where is all the inventory?”Well, there are a few factors that have led to this inventory crisis. Like most things, it often takes that perfect storm of events that culminate, that’s how this began with 2019 already experiencing lower than normal inventory levels.1. Millennials.  As the millennial generation is now grown up and in their 30’s, they began setting their sights on homeownership.  These home buyers were purchasing their first homes.  Unlike other home buyers that were selling their current home to purchase the next, these first time home buyers were purchasing up inventory without putting any additional inventory on the market.  And according to the Nation Association of Realtors, these Millennial homebuyers made up a large portion of buyers in the market over the past 5 years!2. Enter Covid.  The year 2020 and the Covid outbreak definitely did not help the real estate market.  There were a lot of unknowns and fears.  A lot of people became too worried to be around people, let alone sellers letting someone walk through their homes. During the first part of the outbreak, there was a lot of uncertainty on the market in general.  Fast forward a year later, the vaccines are out and being distributed, but there is still a lingering fear causing sellers to still be cautious.3. Sellers are hesitating.  There are a lot of sellers that are looking to take advantage of this insane market and pull out their profits on their home.  But they are hesitant to put their home on the market, due to the fear of whether or not they will be able to find another home to move into.  It's definitely a catch-22... but check out my previous video on 4 strategies on this exact point (FOUR WAYS TO AVOID THE LOW INVENTORY DILEMMA).4. Unprepared new builders.  Even new builds right now can’t keep up with the demand.  Between the insane price increases and limited availability of materials., this has caused builders to carefully consider each home that they are preparing to build.  In addition, most home builders were not prepared for such a level of demand that they are seeing today.  And because of that, timeframes for new construction have increased as much as 200%+Now, this market can’t last like this forever.  We are starting to slowly see the inventory levels increasing month over month, but we aren’t out of the woods yet.  If you have had any questions about the real estate marketing or thinking about selling, give us a call.  We look forward to hearing from you!