It is a Seller's Market. But what does that mean?
It is pretty simple actually. The number of people searching for homes is greater than the number of homes available. We currently have a historically low shortage of home inventory in our market. Good ole supply and demand, right?
When this happens the leverage in a real estate transaction swings towards the seller. In this market a Home Seller can be choosy and a Home Buyer needs to be ready to play ball.
So How Did We Get Here?
1) New Construction hasn't kept up with population growth.
According to this article in the WSJ there is a national housing shortage of 7.3 million units because there hasn't been enough housing added as we've experienced economic growth.
2) Also, I think existing home-owners are hanging on to their low mortgage payments with their crazy low interest rates they got a few years back. Many current home-owners bought during a buyer's market, so their payment is super low for the market they are in.
I'm in this group. I would love to sell my house and pocket all the equity we've built over the last six years as we made payments and home prices in Crestwood have soared. But man... my $934/mo house payment & my 3.75% interest rate are tough to beat!! I would easily have to double my monthly payment to turn around and purchase another house for my crew in this market.
More Homes On The Way
According to an article in the Birmingham Business Journal last month, new construction is picking up in Birmingham as well as the surrounding suburbs.
Trussville and Gardendale lead the way in New Construction according to building permit data...but Birmingham is not far behind!!!
"Real estate brokers say one of the biggest factors impacting the market is increasing demand to live near the city center, and the data backs up those anecdotes. Birmingham had the third highest increase in residential building permits between 2016 and 2017 at 25 percent. Between 2013 and 2017, total residential building permits for new homes in Birmingham were up 33 percent."
What Does This Mean For Buyers & Sellers?
Sellers: It is a great time to sell your home. Many people in Birmingham who love their home and their neighborhood are considering selling their home. Why? Because the prices people are willing to pay are just too good to turn down.
But remember potential home seller, unless you are relocating to another market, you will have to buy in the same market you just sold in.
Buyers: It is not 2010 anymore, guys. Several years ago buyers had all the leverage. You could take your sweet time deciding whether or not to offer on a house, and when you finally decided to offer you probably low balled it.
These days as a home buyer you need to be aggressive... not stupid, but aggressive. You more than likely will not have a lot of time to schedule a showing and make an offer on a home before it is under contract. So you need to be decisive and come with a strong offer. It is more common than not for you to be in a competitive situation against other buyers these days.
But don't get frustrated potential home-buyer...plenty of people in our market are still finding great homes that fit their needs in great locations. It can be done, but you need to realize the market has changed.
Cheer Up Buyers...It Could Be Worse
Recently Lending Tree did a study on the nations Top 100 cities. Of those Top 100 cities, they did a study to determine the most competitive housing markets for home-buyers. Good news guys... Birmingham came in at 94! So it is still a lot easier to buy a home in Birmingham than many other places in the country.