Are the Number of Homes on the Market Increasing?

Over the past two years, the housing market has experienced a scarcity of available homes, causing significant ripples across the country. However, amidst this scarcity, signs of change are emerging, hinting at a potential increase in the number of homes entering the market.

Let’s delve deeper into this evolving scenario.

The Renovation Wave: A Potential Game-Changer

New Western, a real estate brokerage, forecasts a potential shift in the US housing market. As approximately 24 million homes reach prime renovation age, opportunities for fix-and-flip investors are on the horizon. This surge in available homes, coupled with investor focus on revamping older properties, could reshape the market dynamics.

– Investor activity in cities like Houston, Texas, Raleigh, North Carolina, and Atlanta, Georgia, has already surged by over 20% in the latter half of the year compared to the earlier months.

– The Great Renovation, projected to continue until 2024 and potentially extend to 2027, stands as a crucial driver for this anticipated market transformation.

Impact on Inventory: Addressing the Shortage

The housing market has grappled with a severe inventory shortage, with only 1.5 million homes for sale in October 2023. This marked a 34% decline from 2018 figures, exacerbating the challenge of affordability due to soaring prices.

– However, optimism arises with projections indicating a potential 5% increase in homebuilding starts for the upcoming year, offering hope for inventory improvement.

– Fix-and-flip investors are poised to play a pivotal role in augmenting housing supply, providing an alternative solution to address the shortage, leveraging their flexibility in regulations compared to traditional builders.

Inventory Status: An Overview

The current market inventory, with 1,487,004 homes for sale in November 2023, reflects a 7.8% decrease year over year. Newly listed homes witnessed a slight uptick, rising by 3.0% year over year, while the median days on the market decreased to 36 days.

– However, the average months of supply, standing at 3 months, remains below the recommended balanced level of 5 to 6 months, signaling a continued imbalance favoring sellers.

Long-term Implications and Forecasts

While the housing shortage persists, efforts to mitigate the scarcity face multifaceted challenges. Factors like lower interest rates, while offering some relief.

– The housing shortage tracker highlights specific metropolitan areas like San Francisco and Boston, facing an acute housing deficit relative to job creation.

– Challenges such as high material costs and labor shortages hamper efforts to bridge the gap between demand and supply.

The Road Ahead: Outlook for 2024

Despite ongoing challenges, experts predict a sustained scarcity in existing homes for sale in the upcoming year. With demand surpassing supply and homeowners reluctant to sell amidst high prices, the scenario remains complex.

– The anticipation of meaningful increases in existing home supply rests on mortgage rates dropping to the low 5% range, which may or may not materialize in 2024.

– Entry-level housing remains notably constrained, bolstering demand and perpetuating elevated home prices.

Make 2024 the Year of Your Dream Home

As the housing market dynamics evolve, potential buyers eyeing purchases in 2024 may find themselves in a challenging yet opportune landscape.

Embrace Home Loans® stands ready with a diverse program catering to various needs. From conventional to unconventional options, rate buydowns, and more, our offerings encompass a wide variety of options.

Reach out to your local Embrace Home Loans office today and let’s talk.