In the Northern Colorado area, we've seen the inventory crunch for about 7-8 years now - more folks moving into town rather than leaving, less new construction coming on-line and people delaying their next move for a variety of reasons. Within the last year, the national market is feeling that squeeze, too. You'll likely hear more and more news about the looming inventory crunch.
There's a terrible cycle that is created in low inventory markets: prices are high due to low inventory so some sellers are hesitant to sell because whatever home they'll want to purchase will also be priced too high for them, they stay put. Some retired sellers on fixed incomes won't want to take on a new, big mortgage, so they stay put. Buyers are willing to bid up on whatever homes come on the market which drives prices up even more. Consequently, with higher prices but nowhere to go, sellers just decide to stay put longer until conditions improve. They might use their new equity or savings to improve their current home. This also increases home prices. Low interest rates bring even more competitive buyers to the market with increased buying potential; that competition brings increased prices. The cycle repeats. While you think sellers have it made, although the increased equity is nice, it's just very difficult for them to logistically work out a sale on their home and purchase another. While I can provide a handful of strategies to make it easier, it still requires a leap of faith to sell and purchase in a busy market when you don't know when you'll be able to find your next home.
According to a recent Realtor magazine article, 25% of homeowners haven't moved in 20 years or more - TWENTY YEARS! Those homeowners have literally bypassed an entire generation of the market and have decided to stay put. We've seen a lot in the last 20 years, and it's really shaken up homeowners. The end of the dot com bust, the great recession and now a pandemic. All of these events have pushed homeowners to favor comfort and stability, rather than the typical move every 5-7 years. You're also seeing a lot of the boomer generation staying put, improving their current homes to fit their needs well into retirement, and aging in place. According to the article, the average homeowner has lived in their home for 13 years, up from 8.7 years in 2010, which is a huge jump. For all my millennial friends out there, considering staying in one place for 13 years is a dream.
Like I mentioned before, we've dealt with this supply crunch for years in Northern Colorado and have been able to get by, but it hasn't been easy. Folks whose budgets don't allow them to live or compete for homes in a community with a median value of $450k+ need to move to outlying communities with fewer amenities that fit their budgetary needs. Towns like Severance, Mead, Johnstown, Wellington and Firestone have been growing like crazy, however, it takes time to improve infrastructure to accommodate new neighborhoods. The truth is, we just won't be able to keep up demand. That, coupled with fewer homeowners jumping in the selling pool, will keep prices moving up and up. The pandemic hasn't helped either. Sellers may be hesitant to let strangers in their home. Or the economic uncertainty that many have felt might keep folks on the sidelines until it blows over.
If you've been struggling with figuring out how to make it all work, let me know. I love strategizing and solving your problems to make it easier and simpler to make a move. Contact me today to get a plan started.