Experts say, “Yes”
Rising real estate costs, demographic shifts, and low inventory has combined to create the most competitive housing market in recorded history. Underbuilding is also a key factor, due to rising costs, labor shortages, and zoning and regulatory barriers to new construction. Economists and real estate industry observers warn this “imperfect storm” of high demand and low supply will continue and even get worse.
“I think it’s fair to say this is the most competitive housing market we’ve seen in recorded history,” says Danielle Hale, chief economist for Realtor.com. “There’s record low inventory and strong interest from buyers in getting into the housing market. There are a lot of buyers and not a lot of sellers.”
She’s referring to the fact that inventory has decreased for 42 consecutive months and is down 8.5% from last year. According to Realtor.com, this problem comes at a time when demographic trends are conspiring to create even more competition.
“We’ve been paying the bill for underbuilding for some time, and every year, it gets worse,” Hale says. “We’re not only not keeping up, we’re falling further behind.”
Many factors combined to create this highly competitive housing market. For instance, millennials are reaching prime homebuying age while baby boomers are looking to downsize. This dynamic can be especially frustrating for young adults because they may be bidding for the same smaller home as someone from an older generation who has the accumulated wealth of decades of homeownership.
Things are better at the high end of the housing market. Homes listed above $450,000 have seen a 1% to 2% increase in inventory over the past year. My recent sale, a monument to modernist design in Santa Barbara is a perfect example. Pictured at the top of this blog, this homage to modernism was listed at $2,395,000 and sold quickly.
I have other amazing listings in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities. Just call me at 805.886.9378 or email me at Cristal(at)montecito-estate(dotted)com and I’ll happily give you a private tour of any homes in my portfolio. Check out this breathtaking Montecito Estate, for example, where provenance and pedigree meet comfort and contemporary conveniences. I can also sell your house when you’re ready to move!