On most days, the question is, How’s the market? For the last several months, my response has been, its rough. That word can mean many things. Busy? Frustrating? Overwhelming? REALTORS® are busy, buyers are frustrated and overwhelmed. These are great descriptions of the Morgantown market. We have no inventory. When you hear someone say this, don’t misunderstand, there are homes on the market however many don’t last long. We all watch the news, read the articles and search the web but do we know the reasons why the real estate market is so rough right now?
There are several contributing factors. The first being the pandemic. 2020 was a pivotal time for everyone. Most of the population adjusted to working from home. What did we do? We searched the internet for news stories. We read and researched everything. We looked at real estate. We saved money on gas, eating out and shopping. We made plans and started mentally renovating our homes. Buyers did this as well and they were ready to buy. But the sellers weren’t as comfortable to list so this lack of inventory drove up the prices and the bidding wars began.
This isn’t necessarily a new concept in real estate. We have had many seller’s markets before the pandemic. But there has never been a housing market quite like this. While the market has, in fact, begun to cool off just a little, it’s still a highly challenging time to be looking to buy given the severe housing shortage. Builders can’t keep up with the demand. Contractors struggle to get needed supplies which can extend the building process.
In a perfect real estate world, home prices would need to rise at the same pace as people’s wages for regular folks to become homeowners. Yet over the past decade, Americans’ average wages have increased by about 2% to 3% each year, according to the U.S. Labor Department. But home prices have risen at a rate of about 7% each year over the same time. Since COVID-19 upended the world in March 2020, prices have risen 13.5% through August.
There’s just a 2.1-month supply of existing homes for sale, according to the National Association of REALTORS (NAR). That’s a tiny amount, up only slightly from February’s record low of 2.0 months of supply. Such a tight supply creates its own self-perpetuating cycle: Homeowners who had been thinking of selling realize it’s going to be hard to find a home to move to, so they decide not to sell.
According to experts, the market seems to be shifting again, hinting at a 2022 that might even be considered somewhat normal: steadier production and supply to meet solid demand for homes, but with more typical levels of price appreciation. This forecast of a changing market could change my answer next time to the market is good!
Happy Halloween to everyone! Watch out for our little ghosts and monsters wandering the streets tonight in search of the candy. It’s almost November, remember to do good things!
Stephanie Lemley, 2021 MBOR President