Patience Is the Key to Buying a Home This Year

The question many homebuyers are facing this year is, “Why is it so hard to find a house?” We’re in the ultimate sellers’ market , which means real estate is ultra-competitive for buyers right now. The National Association of Realtors (NAR) notes homes are getting an average of 4.8 offers per sale, and that number keeps rising. Why? It’s because there are so few houses for sale.

 

Low inventory in the housing market isn’t new, but it’s becoming more challenging to navigate. Danielle Hale, Chief Economist at realtor.com, explains :

 

The housing market is still relatively under supplied , and buyers can’t buy what’s not for sale. Relative to what we saw in 2017 to 2019, March 2021 was still roughly 117,000 new listings lower, adding to the pre-existing early-year gap of more than 200,000 fresh listings that would typically have come to market in January or February. Despite this week’s gain from a year ago, we’re 19 percent below the new seller activity that we saw in the same week in 2019.”

Search Homes for Sale in Rhode Island

While many homeowners paused their plans to sell during the height of the pandemic, this isn’t the main cause of today’s huge gap between supply and demand. Sam Khater, Vice President and Chief Economist at Freddie Mac, Economic Housing and Research Division, shares :

 

The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes . . . That decline has resulted in the decrease in supply of entry-level single-family homes or, ’starter homes.’”

 

When you consider the number of homes built in the U.S. by decade , the serious lack of new construction is clear (See graph below):

The number of newly built homes is disproportionately lower than the rate of household formation, which, according to the U.S. Census Bureau , has continued to increase. Khater also explains :

 

Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage and that deficit has grown. In 2018, we estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, we estimate that the housing shortage increased to 3.8 million units by the end of 2020. A continued increase in a housing shortage is extremely unusual; typically in a recession, housing demand declines and supply rises, causing inventory to rise above the long-term trend.”

We created this Guide to Buying a Home in Rhode Island to help our buyer clients become acquainted with the components of the home buying process. Our homebuyer's guide covers everything from financing, searching for a home, the offer process, all the way through the contract process to closing day. It's a great resource for anyone interested in learning more about the home buying process. Tap below to read the guide. 

To catch up to current demand, Freddie Mac estimates we need to build almost four million homes. The good news is builders are working hard to get us there. The U.S. Census Bureau also states :

 

“Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,766,000. This is 2.7 percent (±1.7 percent) above the revised February rate of 1,720,000 . . . Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,739,000. This is 19.4 percent (±13.7 percent) above the revised February estimate of 1,457,000. . . .”

 

What does this mean? Lawrence Yun, Chief Economist at NAR, clarifies :

 

The March figure of 1.74 million housing starts is the highest in 14 years. Both single-family units and multifamily units ramped up. After 13 straight years of underproduction – the chief cause for today’s inventory shortage – this construction boom needs to last for at least three years to make up for the part shortfall. As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs, and hence, more choices for consumers. Housing starts to housing completion could be 4 to 8 months, so be patient with the improvement to inventory. In the meantime, construction workers deserve cheers.”

Bottom Line

If you’re planning to buy this year, the key to success will be patience, given today’s low inventory environment. Let’s connect today to talk more about what’s happening in our area.

Contact The Perrino Team

Call Us at 401-206-8907 or Email theperrinoteam@perrinoproperties.com

We’ll listen, it’s always confidential, and we’ll work with you!

Search all the newest listing for sale and organize your search in one easy to use place.

Find your home value now. Fast, free and easy report includes list of sold comps

I'm an image

Read our Guide to Buying a Home. Find and Buy a Home You'll LOVE!!!

Our Seller Guide will help you focus on what'll get the highest sale price for your home 

Fast, free, and easy home value report. Simply put in your address, confirm a few details and see your home's value. Report includes market price spread, anticipated sale price, and comparable sold homes. Thinking of selling or just curious about what your home is worth? Tap below for your home value report.  

Become a Rhode Island Real Estate  MARKET INSIDER

The Rhode Island Real Estate market moves quickly. We provide a FREE monthly insider news letter and direct access to our EXCLUSIVE Insider Market Report articles featuring professional analysis and insight into current Real Estate market trends. This content is provided for free. To get instant access and become a RI Real Estate Market Insider, tap below to subscribe. 

Sell Faster and For More Money

AND Get up to $5000*  Back at Closing

The Real Estate Market in Rhode Island is absolutely on fire. There are more buyers looking for homes and less homes for sale. I’m getting so desperate to find homes for my buyers that I am offering up to $5000 credited back to my sellers that list with our team in the next 3 months.

We have thousands of buyers in our database with hundreds of active searches daily on our property search website. 


We’ll get you multiple offers on your home . Call or text me



We are so confident we can sell your house quickly and for top dollar that we're willing to offer you up to $5000* towards your seller side closing costs when you list your house with us.

 

Click the button below to find out more

or call us at 401-206-8907 and ask about

The Seller $5000* Program

 

Conditions apply*. Seller must list property for sale with The Perrino Team and successfully close. Seller credit must be approved and accounted for on settlement statement to be applied. Other conditions apply. May not be combined with other offers. Seller credit must be written into listing agreement contract. Credit amount is based on list price and agreed upon listing commission and other terms and conditions apply.