With Spring fast approaching and the tidal wave of home-buyers that comes along with it, there simply isn’t enough supply of homes to meet the demand.
It’s basic math; the number of people looking to purchase homes is greater than the number of homes available for purchase. The supply doesn’t meet the demand and thus market has been significantly stagnant.
The remedy in place to create newly acquirable homes for existing home-buyers fell through due to a lack of sales. In order to create a market for pre-owned or lived-in homes, many new homes were built in hopes that homeowners would trade up. Unfortunately, the number of new homes that were sold last month didn’t make much of dent.
Roughly 618,000 new homes (homes that were built recently) were sold in the month of February, which pales in comparison to the strong demand for housing. The Chief Economist of realtor.com stated in an article that “more new-home sales are needed to restore balance in the housing market,” and that “there is plenty of room for growth” for new homes to be built.
Despite having the space to build these new homes, people still aren’t going for the upgrade. It’s possible that the trending fad of rehabbing homes has made constructing new homes obsolete, but it’s more likely that finances are the key factor. The median cost of building a new home is almost $100,000 more than the median cost of buying an existing home, according to that same article by realtor.com.
Selling an existing home can actually be a financially advisable move, depending on a few factors. Certain upgrades to the home can improve its market value as well as increase buyer demand. Installing things such as new appliances or new windows can help retain or increase your home’s value. Window replacement alone can regain 73% to 77% of the original cost when you sell your house.
It’s still too early to tell what the market will do in the remainder of the year, but as new homes continue to be built and people sell their homes, the market will continue to inch forward.