An important metric in today’s residential real estate market is the inventory of homes available for sale. The shortage of available housing inventory is the primary reason for the double-digit price appreciation we’ve seen in the last two years. Ireason purchasersdwho -be purchasers are frustrated with the bidding warsr the available hohomeswever, signs of relief are finally appearing.
According to data from realtor.com, active listings have increased over the last four months. They define active listings as:
“The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month.”
What normally happens throughout the year?
Historically, housing inventory increases throughout the summer months, starts to tail off in the fall, then drops significantly over the winter. The graph below shows this trend, along with the month active listings peaked in 2017, 2018, and 2019.
What happened last year?
Last year, the trend was different. Historical seasonality wasn’t repeated in 2020 since many homeowners held off on putting their houses up for sale because of the pandemic (see graph below). In 2020, active listings peaked in April and then fell off dramatically for the remainder of the year.
What’s happening this year?
Due to the decline of active listings in 2020, 2021 began with record-low housing inventory counts. However, we’ve been building inventory over the last several months as more listings come to the market (see graph below): There are three main reasons we may see listings continue to increase this fall and into the winter.
- Pent-up selling demand – Homeowners may be more comfortable putting their homes on the market as more and more Americans get vaccinated.
- New construction is starting to take off – Though new construction is not included in the realtor.com numbers, as more new homes are built, there will be more options for current homeowners to consider when they sell. The lack of options has slowed many potential sellers in the past.
- The end of forbearance will create new listings – Most experts believe the end of the program will not lead to a wave of foreclosures for several reasons. The main reason is the level of equity homeowners currently have. Many homeowners will be able to sell their homes instead of going to foreclosure, leading to additional listings on the market.
Bottom Line.
If you want to buy a home in Chicago, Illinois, contact real estate professionals at KM Realt Group LLC. New listings are becoming available every day. If you’re considering selling your house, you may want to list your home before this additional competition comes to market.
