This month’s market update should be called the “shortage update” and it continues to tell the story of a housing market that is in severe shortage. We showed a home two weeks ago that had 70 offers on it. I was flabbergasted.
Not every listing is like that. That was certainly an outlier. But, we are seeing multiple offers coming in 20% over listing price, with the appraisal contingency waived and even sometimes the inspection contingency waived. Waiving the inspection contingency is very dangerous territory, unless you are sitting on a couple bitcoins that you are willing to sell in case some major repairs come up.
Let’s have a look at the Cromford Report‘s monthly infographic in their shortage update. There are only 4,761 active listing on the market. That is 57% less than there were this time last year. And that year was dramatically down from 2019!
In short, even if we doubled the number of listings on the market, prices would still be climbing. The demand is that strong.
It is also notable for this shortage update that the month’s supply is as low as it’s been in 20 the last 20 years. When we talk about month’s supply, we think in terms of how long the current inventory would last if no more homes came on the market. In other words, we would exhaust all of the homes for sale in 15 days if no more properties were coming on the market.
The listing success rate is very high, but it’s been that way for a while. Still, the fact that 92% of all listings will close, rather than expire or cancel, is amazing.
So, what does this mean for you? If you have been wanting to buy a home, we suggest you either prepare to go in much higher than asking price with extra cash to waive the appraisal contingency, or sit back and save your money. This has to change sometime.
If you are sitting on investment properties, please consider selling. One of the reasons for this shortage is that tens of thousands of people bought homes to turn in to rentals. So, if we are going to stabilize this market, we need those properties to come on the market.
