There's something really strange happening right now: There are seemingly no homes for sale, and yet the number of actual sales this year is probably going to be up compared to 2020. How could that be? If there's a housing shortage, shouldn't that mean fewer homes will sell? These questions get at the heart of the current inventory shortage. And more importantly, they hint at how it might, eventually, resolve. As Inman has reported this week, agents are exhausted, consumers are literally crying after losing bidding wars, and economists are calling the situation unprecedented. On the other hand, data that the National Association of Realtors provided to Inman projects a total of nearly 6.5 million existing home sales in 2021. That's up significantly from just 5.64 sales in 2020 and 5.34 in 2019.
What these numbers highlight is the fact that "inventory" is a measure of the balance between supply and demand. For example, if the number of homes on the market suddenly doubled, there'd be more supply. But if the number of hopeful buyers quadrupled at the same rate, all those new listings still wouldn't be enough. There'd be an inventory shortage. And that's basically what's going on right now: Demand is outpacing supply.
The U.S. housing market is 3.8 million single-family homes short of what is needed to meet the country's demand, according to a new analysis by mortgage-finance company Freddie Mac . The estimate represents a 52% rise in the nation's home shortage compared with 2018, the first time Freddie Mac quantified the shortfall. The figures underscore the severity of the housing deficit, which is a major factor fueling the current red-hot housing market. The shortage is especially acute for entry-level homes, which makes it more expensive for first-time home buyers to enter the market, said Sam Khater, chief economist at Freddie Mac. "We should have almost four million more housing units if we had kept up with demand the last few years," Mr. Khater said. "This is what you get when you underbuild for 10 years." Freddie Mac reached its shortage figure by assessing the amount of single-family home building needed to match demand from household formation, second-home purchases and replacements of damaged or aging U.S. homes, and comparing that with the pace of construction.
The number of new homes hitting the market across the United States is up from one week ago, but not so in the DFW market. In fact, the severe shortage of homes for sale in Dallas-Fort Worth shows no sign of a resolution. In the Dallas area, home listings are down almost 70% from one year ago with only 6,000 homes active on the market the last day of March. That trend of depletion is expected to continue.
"The Dallas-Fort Worth area today reminds me of what Southern California was like 30 years ago, where First Foundation started,
and for me personally, it is nice to return to Texas as my roots are in the South," said Scott Kavanaugh, CEO of First Foundation,
in a prepared statement. "Texas has such a business-friendly environment which gives us confidence in being able to serve
the communities of Dallas with our high standard of exceptional client care.
Coppell (Area 21) – Residential Closings 3/1/2021 – 4/12/2021
Dallas – Fort Worth Inventory of Active Listings in MLS
The coronavirus pandemic "threw jet fuel" on the exodus from high tax states such as New York, California and Illinois to Texas, according to Rastegar Property Company CEO Ari Rastegar. The expert real estate developer also pointed out that the housing boom taking place in the Lone Star State points towards a massive influx of Americans searching for a better cost of living.
Housing prices in Austin, Dallas, and throughout the Golden Triangle are surging. The point is, like we see this as a COVID thing, but really this was already happening, COVID threw jet fire -- jet fuel on it. It's not going to stop. People are going to keep coming to states like Texas and Florida. Employers love it because their employees get an immediate raise effectively by moving to Texas, Florida or cities like that. And not just on a tax basis, but houses are cheaper, lower cost of living, gas is cheaper. So there's a whole confluence of events that are leading to this. Get ready Texas, the boom has only begun!
North Texas home prices rose at the fastest clip in more than ten years in March. The median price of a single-family resale jumped by 16% to $312,000, and the price per foot jumped 19% from March 2020. This is according to a just released report from the Texas Real Estate Research Center and NTREIS.. The surge in home prices in North Texas comes as the shortage of homes for sale worsens. Only 6,085 single family homes were listed for sale in March, a 71% decline from the inventory just one year ago. "With this acute shortage of listing inventory, home prices are headed higher," said Ted Wilson, principal of Residential Strategies. "There are not enough listings to meet the demand." The DFW homebuying binge is in part fueled by moves to the area by thousands of people from California, New York, Illinois and other states. "As the economy improves and in-migration continues, I expect prices will continue to rise," notes Paige Shipp, a housing researcher for CDCG Asset Management. "At what point are prices so high that buyers cannot afford to purchase? That's the real question.
Though the real estate market has long been competitive in pockets of the U.S., the great thing about America is that there's typically always been somewhere else that's affordable. Drive an hour or two outside of San Francisco or New York, and you could find a deal. It's an idea that's baked into the country's foundational mythology.
Now, however, that idea is collapsing in entirely new ways. Thanks to a unique convergence of an underproduction of homes, demographic shifts and the coronavirus pandemic, home price explosion isn't just limited to the coasts any more. Instead, there are bidding wars across Minnesota and Connecticut and Florida and pretty much everywhere in between.
To get a sense of what is going on, Inman reached out to dozens of real estate agents. The takeaway from these conversations is that they're exhausted after writing dozens of offers and doing endless showings. Their clients are disheartened after losing countless bidding wars. Agents are an entrepreneurial bunch and many remain upbeat — and in some cases are doing well financially — but the workload is unquestionably heavier now.