The current demand for housing is high and the supply does not create the balance we have seen in years past. In fact, Zillow noted that in February 2021 the number of homes for sale were down 30% from February 2020. In retrospect, that is about a 26% larger decrease than we saw between 2019 and 2020. Experts say that this imbalance is not directly related to one specific cause, rather spanning all the way back to the beginning of the housing crash in 2007 and subsequent labor shortage. Combine that with today’s well-known effects of COVID-19, millennials (the largest group since the baby boomers) entering the peak of the home buying stage, and the general spring buying market and there is simply not enough inventory to appease it all. Because of this, brokers have seen changes in buyers’ behaviors including the dramatic increase of bidding wars, quick sales, and ongoing price increases ranging well over asking price. Overall, Jim Dalrymple II, the author of Inventory Insanity, summarizes it as, “a situation few in the industry saw coming.”
Read more about these relevant concepts in his article “Inventory Insanity”.