Updated: Apr 16, 2021
It seems like everyone is talking about the real estate market because of the current state it is in. Inventory is low and so are interest rates. Those factors have been driving up prices and making the market for buyers hyper-competitive. Some people are afraid we are on the verge of some sort of bubble that is about to burst. Yet, these circumstances are so much different than those of previous housing crises. Let's take a look at the numbers and see what story they're telling.
Today we are looking at the supply of homes for sale and how they affect the pricing of properties. The Law of Supply and Demand states that consumers will compromise on some of their values when demand is low. That could be the type of home, size of the home, or location of the home.
Here we see a five-year history of homes for sale in four local parishes. Interestingly enough, Plaquemines and St. Bernard Parishes seem to have the same number of homes for sale as they typically do. However, Jefferson and Orleans Parishes show a severe decline in homes for sale. Let's take a look at how that affects the price per square foot.
Here we see increases in all four parishes for price per square foot. Why is that? Could the decrease in availability in Jefferson and Orleans lead buyers to other parishes? Why else would the price per square foot increase while their inventory remained the same? We took back to the Law of Supply and Demand and remember that consumers are willing to sacrifice certain traits they value to fill their needs. In this case, it is the location of the properties they are considering.
With vaccinations on the rise, we could see an increase in confidence in potential sellers to list their homes. With more homes becoming available, it is suspected that the median sales price of homes will decrease. Also, buyers may be able to negotiate better terms such as added contingencies. However, there is no telling when exactly we will see a rise in inventory.
Make sure to talk to your real estate agent about what strategy would work best for you as a buyer or a seller. If you're looking to meet with an agent, I can be reached at firstname.lastname@example.org or 504-432-0263. #LevelUp