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Real Estate
Soaring Housing Supply & Its Effect
September 4, 2021
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In the real estate market, the number of houses for sale is a crucial factor. With the increase in listings, there is a gradual and continuous increase in homes coming for sale. Whether you want to buy or sell property, you might be wondering what will be the effect of the increasing housing supply on you and that’s what we are here to explain.

Increasing options for buyers

Just like any other product, more supply means more options in the market. So, with an increase in market listings, your chances of winning a bidding war are higher due to fewer competitors.

You are having the option of choosing from multiple properties without having to negotiate. So, if you are searching for a property relentlessly, then now is the time to move forward with purchasing within the low-interest rates. Experts have predicted that mortgage prices will start rising in the near future. So, you should plan to invest in a house if you want to purchase within the present affordable price range.

Favorable to sellers too

You might ponder if selling your property is a bad option in a market with an overabundance of supply. It is certainly not. With the increasing inventory, you can sell your house right now instead of waiting longer for the supply to decrease. Even if the supply is more, the seller’s market is in favorable conditions. Remember, more houses eventually lead to more buyers and more sales. If you can maximize your profit by selling now, put up the house for sale because the upcoming competition can be challenging. With the present increase in supply, more houses will be coming on the market for sale in the coming season. Experts recommend acting now instead of prolonging the sale. 

3 Factors affecting the housing supply: 

Even if the precise values contributing to the rising housing supply cannot be easily measured, some factors are easily identifiable:

  1. Real estate market is not like other industries. The demand and supply are not opposing factors to evaluate the condition of the market. Real estate is illiquid because the transactions take a long time to consummate. Thus, the demand for houses depends on the low-interest rates. Due to uncertainty in the economy, the low-interest rates can lead to sellers moving to put houses on sale. 
  2. In real estate, inventory increases due to the rise in the migration of families. Some downsize, some neutral families choose to move to minimal houses, and other reasons. The economic and structural issues of areas also result in others moving out. 
  3. With the current boom, new home construction and development is a vital factor. Real estate is a tangible asset, so people invest in building houses to keep pace with the increasing housing demand. 

Conclusion: 

With more houses up for sale, buyers have the advantage of choosing from a decent number of options, and the sellers have a growing competition to sell. So, to end up with the best deals, whether it be buying or selling houses, you should plan and act soon to make your best move.

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Richard Nevis

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