• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Pacific Funding Group

Your Professional Mortgage Resource

Talk to a loan expert today.
Call (888) 663-9350
better business bureau A rating

Top 100 Mortgage Lender Badge

Follow Us On Facebook

  • Home
  • About
    • PFG Careers
  • Loan Programs
  • Apply Now
  • Divisions
    • Builder Division – New Home Financing
    • CU Lending Division
  • PFG Blog
  • Contact
  • Do Not Sell My Information

Patience Is the Key to Buying a Home This Year

April 28, 2021 By Pacific Funding Group

Patience Is the Key to Buying a Home This Year | Simplifying The Market

The question many homebuyers are facing this year is, “Why is it so hard to find a house?” We’re in the ultimate sellers’ market , which means real estate is ultra-competitive for buyers right now. The National Association of Realtors (NAR) notes homes are getting an average of 4.8 offers per sale, and that number keeps rising. Why? It’s because there are so few houses for sale.

Low inventory in the housing market isn’t new, but it’s becoming more challenging to navigate. Danielle Hale, Chief Economist at realtor.com, explains :

“The housing market is still relatively under supplied, and buyers can’t buy what’s not for sale. Relative to what we saw in 2017 to 2019, March 2021 was still roughly 117,000 new listings lower, adding to the pre-existing early-year gap of more than 200,000 fresh listings that would typically have come to market in January or February. Despite this week’s gain from a year ago, we’re 19 percent below the new seller activity that we saw in the same week in 2019.”

While many homeowners paused their plans to sell during the height of the pandemic, this isn’t the main cause of today’s huge gap between supply and demand. Sam Khater, Vice President and Chief Economist at Freddie Mac, Economic Housing and Research Division, shares :

“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes . . . That decline has resulted in the decrease in supply of entry-level single-family homes or, ’starter homes.’”

When you consider the number of homes built in the U.S. by decade , the serious lack of new construction is clear (See graph below):Patience Is the Key to Buying a Home This Year | Simplifying The Market The number of newly built homes is disproportionately lower than the rate of household formation, which, according to the U.S. Census Bureau , has continued to increase. Khater also explains :

“Even before the COVID-19 pandemic and current recession, the housing market was facing a substantial supply shortage and that deficit has grown. In 2018, we estimated that there was a housing supply shortage of approximately 2.5 million units, meaning that the U.S. economy was about 2.5 million units below what was needed to match long-term demand. Using the same methodology, we estimate that the housing shortage increased to 3.8 million units by the end of 2020. A continued increase in a housing shortage is extremely unusual; typically in a recession, housing demand declines and supply rises, causing inventory to rise above the long-term trend.”

To catch up to current demand, Freddie Mac estimates we need to build almost four million homes. The good news is builders are working hard to get us there. The U.S. Census Bureau also states :

“Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1,766,000. This is 2.7 percent (±1.7 percent) above the revised February rate of 1,720,000 . . . Privately-owned housing starts in March were at a seasonally adjusted annual rate of 1,739,000. This is 19.4 percent (±13.7 percent) above the revised February estimate of 1,457,000. . . .”

What does this mean? Lawrence Yun, Chief Economist at NAR, clarifies :

“The March figure of 1.74 million housing starts is the highest in 14 years. Both single-family units and multifamily units ramped up. After 13 straight years of underproduction – the chief cause for today’s inventory shortage – this construction boom needs to last for at least three years to make up for the part shortfall. As trade-up buyers purchase newly constructed homes, their prior homes will show up in MLSs, and hence, more choices for consumers. Housing starts to housing completion could be 4 to 8 months, so be patient with the improvement to inventory. In the meantime, construction workers deserve cheers.”

Bottom Line

If you’re planning to buy this year, the key to success will be patience, given today’s low inventory environment. Let’s connect today to talk more about what’s happening in our area.

Filed Under: PFG Blog

Primary Sidebar

Prequalify for A Loan Today!

Complete this form and get prequalified for a loan in 2 minutes!

  • By clicking the "Get My Free Quote!" button, I acknowledge that I agree to receive a phone call from 1 Loan Specialist at Pacific Funding Group at the number provided. Consent is not a condition in order to qualify for a loan. Your information will never be shared with any third party. Ever. 128 bit Encryption.

Footer

Walnut Creek

1261 Locust St #2424
Walnut Creek, Ca. 94596

Walnut Creek

325 N. Wiget Lane STE 130
Walnut Creek, Ca. 94598

Antioch

5123 Lone Tree Way
Antioch, Ca. 94531

Loan Programs

  • Home Mortgage Loans
  • Loans For Our Heroes
  • FHA Loans
  • Home Loans
  • Reverse Mortgage Loan

Home | About | Calculators | Loan Programs | Mortgage FAQs | Fair Lending Statement | Apply Now | Loan Lock Form

Copyright © 2023 · All Rights Reserved · Privacy Policy · Pacific Funding Group · Site by Clifton Creative Web

Equal Housing Opportunity Lender. Not a commitment to lend. Rates and programs are subject to change. Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act. AGV Grouppe, Inc. dba CU Lending; Pacific Funding Group | 1261 LOCUST ST #2424 WALNUT CREEK, CA 94598 | DRE License ID: 01796227 | NMLS ID:2258009

equal housing opportunity logo