Where has all the Real Estate inventory gone?

For the last year, we have seen the real estate inventory dwindle driving home values up and creating a huge demand for inventory.  As Americans across the country relocate due to jobs and the rising cost of living, demand across the country has dramatically increased.  So where has all the Real Estate inventory gone? 

Many homeowners today have decided not to sell and not move during this pandemic. For Rental property owners, an eviction moratorium has been in place not allowing many landlords to evict. It is estimated that there are more than 200 million tenants past due on over 21 billion in rents. Sadly for many landlords, they will not have the money or resources to renovate properties and get them ready to rerent. The moratorium is also in effect for banks, who still can not foreclose and add those properties to the market inventory. 

Because of these factors, there is a shadow inventory of Real Estate that at some point will flood the market. Although this may be great for many new homebuyers, too much inventory can drive property values down. It is safe to say that when this pandemic is over and society returns to normal there will be a flurry of activity in the real estate market. 

Although many homes today are selling above market value, this can create a whole new potential problem of people owing more than the home is worth. For every 1% increase in interest, consumer buying power will be diminished by 10% affecting the value of Real Estate. 

While paying above asking price in this market is normal buyers still need to be cautious and implement a strategy behind over asking price offers. As an investor our personal strategy is working backward from the Average Retail Value (ARV) of the property. For example, if the home market value is 300k but needs 30k in repairs and the seller is asking 175k, it's safe to say one can still offer 25k over the asking price, have room for repairs, and still walk away with equity and have a little wiggle room for deflation. Although these scenarios are not that common they still exist even in today's market. 

How can you find these under-market deals? Well, our advice is to sign up for the latest emails from Zillow and craigslist to always be one of the first to know when an opportunity is presented. Many times we will submit offers sight unseen just based on the numbers. This may not be the best strategy for new homeowners, but for experienced investors, this is the way to go. 

For more strategies on how to get your offer accepted check out our blog on Top Strategies to Get Your Offer Accepted. 

Please check out our website at www.whats-my-home-worth.net for more information and free home evaluation.