Homeowners Hold On: The Real Estate Market Faces Record Low Listings and Frustrated Buyers
The real estate market has been a hot topic for the past couple of years, as the COVID-19 pandemic changed the way people live and work, and as a result, also changed their housing needs. However, a new report from Zillow suggests that the market is now facing a new challenge: the lack of inventory.
According to the report, homeowners are now choosing to wait it out instead of listing their houses for sale, leaving potential buyers with limited options and frustration. The number of new listings in February was at a record low for this time of year, nearly a third lower than before the pandemic, and 22% lower than last year.
One of the reasons for this phenomenon is the volatility of the economy, which makes planning extremely difficult for homeowners. Additionally, mortgage rates have increased by 50% since last year, with the average monthly payment being $1,831 at 20% down. Homebuyers who bought or refinanced in 2020 or 2021, when rates were well below 3.5%, are unwilling to trade in their current mortgage for a new one with double the interest.
As a result, the lack of inventory is contributing to the low inventory levels, which are now 17% higher than February 2022, but still about 43% below pre-pandemic norms. The overall lack of inventory, along with the resurgence of buyers when costs fall, should prevent significant price declines, said Zillow.
The report also highlighted that home values are 4.4% higher than a year earlier, but at a rapidly decelerating pace of annual growth, down from the nearly record-high 18.8% year-over-year growth measured last April. In Tampa Bay, the median home value is currently $357,951, a 5% increase over the previous year.
While homes in Tampa Bay are on the market for an average of 21 days, which is lower than the national average of 17 days, it is more time than in 2022 and 2021, when time on the market was seven and nine days, respectively, but significantly less than before the pandemic.
The lack of inventory in the real estate market is a concern for potential homebuyers, as they are faced with limited options and higher prices. It is unclear when the market will stabilize, but it is clear that the pandemic has had a significant impact on the housing market, and its effects will be felt for years to come.