As you probably have probably heard, home inventory levels are at record low levels. There is a complex set of reasons why this has happened, some of them dating back to the housing crash of 2007+ when home builders went bankrupt and never came back. Recently, in Q3, more investors entered the housing purchase market, fueling already high buyer demand and making it even more difficult for everyone but particularly first-time buyers to purchase a home.
Consider the following statistics for October 2021*:
- Investors made up 17% of October home buyers, up from 13% in September and 14% in October of 2020
- All cash buyers represented 24% of buyers. Most investors use all cash
- Nationally, there is a 2.4-month supply at the current sales pace. A 5 to 6-month supply is considered a balanced market between buyer and seller
- Currently in the King-Snohomish County area, there is a 0.5 month supply of single family homes. This means if no new homes came to the market, at our current sales pace, existing inventory would be gone in two weeks
- First-time buyers represented 29% of sales compared with 32% a year ago. Historically that share is around 40%
High demand is the biggest issue affecting price and inventory. Simply put, demand far exceeds supply which puts upward pressure on prices. To show you how extreme our inventory situation is, consider the yellow graph below. This graph represents the past 15 years of quarterly housing inventory levels in the King-Snohomish County area. Can you see how low inventory is now compared to years past? Having talked with seasoned agents who have been in business for 40+ years, what I have heard repeatedly is, “I have never seen inventory this low.” The situation we are in is (and I hate to use this word because it is so overused) unprecedented. In other words, this has never happened before. The numbers bear out their anecdotal experience.
If you have questions or want to discuss how this data might impact your housing or financial planning, I would be happy to help you. If you want to know my thoughts and expectations going forward, I am happy to discuss that as well.