Time to Panic? What Happens to The Real Estate Market if There is no Housing Inventory?
While real estate brokerages are patting themselves and their agents on the back for record 2021 numbers of sales and closings, buyers and their Realtors are quietly getting worried that 2022 is going to be quite a challenge. Is that the sound of panic? Not yet, but it sure sounds like something.
Recently the Greater Fort Worth Association of Realtors released the monthly statistics provided by the Texas Real Estate Research Center for December 2021. Depending on who you are, they weren’t good.
This isn’t new news. Our Tarrant County Tuesday column has predicted, prognosticated, and preached about the lack of housing inventory in Tarrant County and the greater Dallas-Fort Worth Metroplex for a while. Since March 2020 (when COVID closed its grip on the United States) the number of homes available for sale has declined, declined, and declined.
The report from GFWAR states there is currently just seven-tenths of a month supply of housing in Fort Worth and Tarrant County. That means there are only enough homes available to fulfill seven-tenths of a month of sales.
A balanced real estate market was previously thought to be six months of inventory. My Boerne High School math education might not win me any contests, but I certainly know that seven-tenths of a month is way less than six months.
So, it’s a big deal. We’ve heard about low inventory for nearly two years. We’ve discussed the supply chain issues for new home construction and delays that builders are facing in fulfilling their orders and obligations. We’ve heard over and over and over how prices are increasing and how it’s a seller’s market.
Why is there the sound of panic from Realtors and buyers all of a sudden? What’s different than before? Reality is setting in at all price ranges.
Sale, But No Sale
Recently I have heard multiple stories from Realtors from brokerages across Tarrant County regarding sellers who put their homes on the market then pull them off the market — although they are getting exactly what they’re asking for … or more!
A home in a prestigious gated neighborhood of Fort Worth was recently put on the market for a very hefty price (basically, more than the house should appraise for). An over-asking-price offer was made by a cash buyer immediately, but the seller decided to take the home off the market because they had no plan for moving so quickly. This all happened in less than 24 hours.
This type of scenario is happening over and over and over again these days in all price ranges. Sellers are excited to get a high price for their homes, but unless they have a plan and place to go next, they aren’t willing to move forward.
If sellers don’t sell then buyers can’t buy. While that seems pretty obvious, we have not experienced this kind of gridlock in the housing market ever.
If there are no homes to buy and rental rates are astronomical, we have a problem.
Truly, 2021 was a great year for many Realtors and real estate brokerages. Records were set and bottles of champagne were uncorked, but those same Realtors and brokerages are starting to feel the pinch of the now and the what is to come.
There is no magic wand or potion to make this issue go away. It’s not COVID or weather or the month of the year. If people don’t start selling their homes, this could be the most bizarre and challenging year in real estate since the Recession. Is it possible to have a reverse recession? Where there is plenty of money in play and plenty of players (buyers) but not enough sellers?
Yep. If someone tells you this real estate market is fantastic, they are lying to you. There isn’t a buyer or Realtor or broker manager or lender or title company or anyone involved in the home sales business that isn’t quietly beginning to make a noise that sounds a lot like panic.