- Buyer demand surge pushing up prices
- December 2019 saw lowest home supply in 20 years
- 2020 may be most robust market in nearly a decade, according to Redfin
Buyers came out in droves during December 2019. The problem? Sellers were few and far between.
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According to the National Association of REALTORS® (NAR), there were only 1.4M single-family homes available to buy in 2019, the lowest volume of for-sale homes in at least 20 years. Realtor.com substantiated NAR’s research by indicating that December 2019 saw the largest y/y inventory decline in nearly three years with inventory dropping -12%.
Coupled with low supply, interest rates are now at their lowest level in three years. The result? Competition for single-family housing is stiff.
Daryl Fairweather, Redfin’s chief economist, said, “With every new release of data this year, I’m becoming more and more confidant that demand will be strong in 2020 – just as strong as, if not stronger than, in 2018 and 2017. The big question for the housing market this year is supply. Will homeowners sit on the sidelines, content with their refinanced loans, or will they want to get in on the act too and move up, move down, or cash out entirely?”
This current rise in competition (bidding wars) and continuous spike in home prices may turn out to be a 10-year peak in homebuyer demand and a 20-year low in the number of homes for sale.
Fairweather continued, “New construction is beginning to pick up in some of the markets though, so even without new listings…there will be some relief for homebuyers hoping for more selection…much of the new construction will be build far way from urban centers or in already affordable metros…” due to the high cost of buying and developing land in expensive coastal cities.
Redfin has already made public its projection that if this early buyer demand in 2020 is emblematic of this coming year, 2020 may be the most “robust” market in nearly a decade.
Thanks to Redfin and HousingWire’s Julia Falcon for source data.