It’s fair to say that 2023 has not been a good year to buy a home. Not only has signing a mortgage become a very expensive prospect, but home prices are holding up at stubbornly high levels. Throw in a lack of inventory, and it’s a wonder anyone can navigate today’s housing market.
In September, existing-home sales fell more than 15% from a year prior, according to the National Association of Realtors (NAR), marking a 13-year low. And that sort of news might read like good news if you’re a buyer. After all, if fewer homes are being sold, it might mean that sellers are getting desperate. And if so, they’re apt to come down on price, right?
Well, not exactly. See, the reason for declining home sales isn’t a lack of buyer demand — it’s a lack of inventory. And until inventory picks up, buying a home is going to be difficult.
Why housing inventory isn’t increasing
There’s a reason housing inventory has been seriously lacking this year, and why it only sat at a 3.4-month supply in September, as per the NAR. Nobody wants to move.
It normally takes a four- to six-month supply of available inventory to meet buyer demand in full. So today’s housing market doesn’t come close from an inventory standpoint. But that’s understandable.
Many homeowners are sitting on record-low mortgage rates because they bought homes or refinanced in 2020 and 2021, when borrowing was extremely affordable. But seeing as how mortgage lenders are charging about 8% interest, on average, for a 30-year loan today as per Freddie Mac, it’s easy to see why current property owners are inclined to simply stay put, even if they can technically use their existing home equity to upsize.
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Think about it: If you had a 30-year mortgage at 3%, would you really want to trade it in for a new loan at 8%? Probably not. So until mortgage rates come down, housing inventory is likely to remain low. And that means we could be in for many more months of declining home sales — not because people don’t want to buy, but because there’s simply nothing to buy.
How to find a home at a time when there’s limited inventory
You may be eager to buy a home as soon as possible. But unfortunately, if you’re looking for a home today, you need to be willing to make compromises. So be honest with yourself — are you willing to do that?
And if the answer is no, that’s OK. We’re talking about buying a home here, not a laptop you might keep for a year or two or a new coat you can always update next season. If there are things on your wishlist you’re just not finding anywhere, it’s perfectly OK to put off homeownership for a few more years, wait for mortgage rates to come down, and try again when inventory is hopefully more robust.
Otherwise, your best bet is to narrow down your wishlist to a few key items. Maybe you can have your attached garage and basement, but you can’t necessarily have a two-car garage and a finished basement. That’s just the way the market is today.
Of course, expanding your search radius might make it so you’re able to find an affordable home that checks off more boxes. But that’s a compromise, too.
All told, a lack of real estate inventory is a major problem right now, and the market is likely to stay that way for a while. There are things you can do to work around that, but if you decide to delay your home-buying plans, no one would blame you at all.