Updated: Jun 3, 2021
If you watch The Level Up Podcast with GNO Realty, you've heard us talk about how low housing inventory has been over the last year. The ripple effects of the COVID-19 Pandemic continue to affect the housing market with no slow down in sight. Let's take a look at the numbers and get an idea of how significant this shortage is.
Crunching the Numbers
First, let's evaluate the trend of single-family homes across the entire MLS (regardless of size or price). The laws of supply and demand are simple and inversely proportional. Low inventory creates high demand and more bargaining power for sellers. Couple this with low interest rates, and there may never be a better time to sell a property.
Let's take a closer look at specific parishes and see how this shortage has affected these areas. The springtime has historically been a time we see movement in the real estate industry. Schools are wrapping up, jobs are changing, and other life events occur that lead to changes in living situations. In April 2021 the parishes of Orleans, Jefferson, St Tammany, and St Bernard had an average of around a 43% decrease overall in listings from April 2020 which was down approximately 25% from April 2019. These numbers encompass all dwelling types (single-family detached homes, multi-family homes, condominiums, etc).
Take a look at single-family detached homes in the entire MLS. However, let's take a look at how this shortage has affected homes by price range. While all homes have seen a dramatic decrease, the most affordable homes have dropped to below 300. Why is it that the most affordable homes are fewer and fewer?
One likely reason we are seeing fewer and fewer homes in the $148,999 and less range is that prices are continuing to rise due to low inventory (but mostly low interest rates). With monthly notes lowered by the borrowing power of buyers, sellers are increasing prices to recoup monies they had previously spent on mortgage interest. The figures below demonstrate how the prices of homes available have shifted over the last three years.
Solutions for Buyers
This is not a hopeless situation for buyers. There are wonderful homes out there for great value. The process won't be easy, and having an agent that is diligent and relentless is crucial in buyers finding that value. The best properties are going to go fast; treat every offer like a "highest and best" scenario.
Find out what the best terms are for your sellers and try to match them as best you can. This can be a closing date, waiving a contingency (never inspections), or agreeing to pay for the difference in appraisal. All of these options are something you should discuss with a licensed real estate agent.
Chuck Stall - Realtor® can be reached at 504-432-0263 or via email at firstname.lastname@example.org.