Yes, there IS a Housing Shortage!
Sometimes I wonder what I should write about. It can be really difficult. The USA Today weekend edition (August 11-13, 2017) made this post simple. Take a look at Number of Homes for Sale Sinks to a 20-Year Low.
“The number of residential houses for sale is at a 20-year low as the appeal of McMansions wanes and Baby Boomers grow increasingly reluctant to trade up or down from their homes, according to a survey by Realtor.Com.”
That first paragraph says it all. It’s a trend I see daily in southeastern Wisconsin. Millennials, the group most likely to buy homes, values urban areas, proximity to shopping and services, and has a strong aversion to commuting. In addition, this group remembers the sting of the Great Recession and is financially conservative in home buying. Baby Boomers spent big in the high-flying 1990s and early 2000s on McMansions in far suburban and exurban areas. Today, Boomers are sitting on assets that can be a tough sell. Their response is to avoid losses by staying put.
While this is a boon for “aging in place” renovation companies, not selling stops sales downstream. Move-up buyers have fewer buying options, so they stay put in their homes. Owners of first-time homebuyer homes have fewer options with move-up homes, so they stay put. Millennials get stuck renting, living with their parents, or have to spend more money for less home.
The raw data is telling. There are 17% fewer first-time homebuyer homes on the market and 10% fewer mid-range/move-up homes available. Prices are up 5.6% nationally and may continue to rise.
What’s to be done? Refuse to participate! If you want to sell, understand that you must to be smart and aggressive to find your replacement home. Just remember that 10%-17% fewer homes mean there are still homes available. Better yet, your own home will sell for more and in less time!
Here are three things to remember:
- As a seller, you are in the driver seat. Consider that many of your peers will be lazy, will refuse to take repairs, and won’t bother staging their property. Take advantage of their laziness by making smart repairs, cleaning, up, and establishing a higher price point.
- Dictate terms. Once you have a grateful buyer on the hook, tell them you need an extended closing. Make them work around your purchase schedule. It costs you nothing to do this, but their cooperation means that you are in a better negotiating position when you buy.
- This will eventually end, though it is going to take a while. Our country adds a Greater Chicagoland of population every three years. The US growth rate is 0.7% and we have 323.1 million people. That growth translates to just under 6.8 million people every three years, or the population of Greater Chicagoland. Now consider that few to no new homes were built from 2007-2015. That’s three Greater Chicagolands (2007, 2008, 2009 – 2010, 2011, 2012 – 2013, 2014, 2015) without any new housing.
We will eventually catch up, but that’s a lot of catching up to do. We also halfway through to adding another Greater Chicagoland (2016, slightly more than halfway through 2017, and then 2018). When we catch up is anybody’s guess, but I don’t recommend waiting around for our housing supply to catch up with demand!
My name is Mike and I am a Realtor / Broker with Coldwell Banker Residential Brokerage of Brookfield, WI. Email or call me at firstname.lastname@example.org or 414-207-2938. Let’s make the housing shortage work for you!