However the booming U.S. housing market has spilled over to the rental market, which has seen demand for apartment and single-family rentals skyrocket this year, as high sales prices and an inadequate supply of available housing have forced many prospective buyers to rent for the foreseeable future.
Increased demand for housing, along with an improving economy, has competition for rental units soaring, and landlords are taking note, with the national median rent increasing 11.4% in 2021 so far, according to Apartment List.
For those looking to buy the supply of homes available to purchase will plunge as many unsuccessful sellers throw in the towel to enjoy the holidays and hold off until the Spring Market. It is hard to imagine that there are that many homeowners lingering on the market, unable to sell, given how hot housing is right now. Yet, there are 513 sellers today, 24% of the current active inventory, who have been exposed to the market for more than two months. Also, November and December are when the fewest number of homeowners opt to list their homes for sale during the year. The five-year average number of homes coming on the market from 2015 to 2019 (intentionally omitting 2020 due to the skew from COVID) for November is 2,275 homes, 46% less than the annual height in May of 4,177. In December it drops to 1,533 homes, 63% less than the height in May. With both sellers throwing in the towel and fewer homeowners coming on the market, the inventory plunges. From 2015 to 2019 the inventory dropped, on average, by 23% by year’s end. With the inventory dropping, there are fewer available options for buyers to choose from. Many buyers also place their home shopping desires on hold while they enjoy the holiday season. As a result, demand, the number of new escrows over the prior month, plunges. From 2015 to 2019 demand sank by 35% to its lowest levels of the year by year’s end.
ATTENTION BUYERS: The incredibly crazy, Hot Seller’s Market persists and that will not change for the remainder of the year, even with demand plunging during the holidays. Remember, it is not just demand that is plunging, the number of available homes to purchase will be plunging as well. To wait until later in the year for a “deal” during the “slowest time of the year for real estate” simply does not make sense. The temperature of housing will not feel much different in December compared to today.
ATTENTION SELLERS: It really is the last call to cash in on the 2021 housing market and find success. Sellers who are clearly overpriced will run out of time and run into an end of the year with drastically fewer participating home buyers due to the holidays. The time to be accurately priced and taking full advantage of maximum market exposure is right now, today.
Credit to Steven Thomas – Quantitative Economics and Decision Sciences.