The housing inventory increased by almost 27% compared to last year. Here’s why it’s great news for shoppers


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Finally, there is some positive news on the property market front.


Key points

  • A glaring lack of housing has driven home prices up over the past year.
  • Now it looks like inventory is increasing, but there’s still not enough supply to meet demand.

There’s a reason so many people have struggled to buy a home over the past year. The real estate market has run out of inventory in a very significant way. This has made bidding wars a mainstay of the housing market, driving up house prices everywhere.

Also, when housing inventory is limited, it gives less choice to buyers. So over the past year, many people may have had to settle for a less than ideal home in order to sign a mortgage and make the leap to homeownership.

But things finally seem to be changing in a positive way when it comes to the housing stock. And now buyers can have more options — and more reasonable home prices — to look forward to.

Inventory is slowly rising

The inventory of homes available for sale rose 26.6% year on year in August, according to Realtor.com. And that’s a positive thing.

When the housing stock increases, buyers no longer have to fight for the same limited number of properties. This means buyers have more bargaining power – and they tend to pay less for the homes they bid on.

But while rising housing inventory is good for buyers, it’s not so good for sellers. Those looking to sell a home want as little competition as possible. Now, sellers may have less leeway to charge exorbitant prices for their homes. They may also have to make more concessions to attract buyers.

For example, over the past year, many buyers were willing to forego a home inspection when buying a home (a risky move, but a tactic that has nevertheless been widely used). This meant sellers didn’t have to worry about costly issues they would have to resolve before closing a sale.

Now, with the increase in housing stock, buyers may be less willing to forgo a home inspection. And that means that sellers could face various hassles when completing transactions, such as having to make last-minute repairs they hadn’t planned on, or having to offer discounts to sellers to fix these issues on their own. Today, sellers may also have to circumvent buyers’ preferred closing times, whereas at the start of the year buyers largely had to circumvent sellers’ schedules.

Supply is still not enough to meet demand

While the increase in housing inventory is encouraging, the reality is that current housing demand still exceeds supply availability. This means sellers need not panic yet, as there are still plenty of opportunities to capitalize on buyer demand.

But those who are serious about listing a home should get moving as soon as possible. If real estate inventory continues to rise, sellers may lose their edge. And while it’s hard to predict when housing supply will grow enough to fully meet buyer demand, there’s reason to believe that could happen by late 2022 or early 2023. This gives sellers a little – but not much – time to capitalize on the edge they still have.

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