Krishna Reddy

Home Buyers Have It Tough as Nation Faces Unprecedented Housing Shortage

It's no news to house hunters that the pickings are slim in today's real estate market. While that has been true for several years, the pandemic has made the situation worse as virus-wary home sellers have pulled their properties off the market, resulting in sky-high prices and out-of-control bidding wars for the remaining stock.

Overall housing inventory plummeted 43% in January compared with the same month last year, according to a recent realtor.com® report. New listings were down 23% year over year.

That means buyers should gear up for battle—it's going to be a very competitive spring home-buying season.

Although the prevailing wisdom is that power is shifting from sellers to buyers, there are indications that sellers are
not relinquishing control easily. Median prices were up from last month in the counties of San Mateo, Santa Clara, and
Santa Cruz, while staying flat in San Benito and decreasing only 2% in Monterey. Year-over-year, median prices were
up in Monterey and San Benito, and only slightly down in the other counties.

The economy shows signs of sluggishness, but not the housing market, according to a new report released this week from the Federal Reserve Bank of New York. Consumer spending is softening and wage growth is “moderate,” but the housing market has rebounded, the Fed says

“A still-strong labor market and low mortgage rates could continue to provide support to housing,” the report notes.

The report did note the shortage of homes for sale as one major hurdle facing the housing market that could limit its continued growth.
Source: “U.S. Economy in a Snapshot,” Federal Reserve Bank of New York (October 2019) and “Federal Reserve Report Cities ‘Rebounded’ Housing Market,” HousingWire (Oct. 15, 2019)