Low Inventory Impacting This Fall’s Housing Market

North Lake Tahoe and Truckee Housing Market Booming in 2020

Thanks to increased remote working and historically low interest rates the real estate market in the U.S. has been booming and a major leader in the economic recovery. One thing has been a challenge all summer though and that is lack of inventory of homes on the market. In the Tahoe Truckee market this has lead to historic numbers of multiple offers seen and incredibly low marketing times. We’re talking 20+ offers in some cases! Low interest rates have kept the cost of buying in a higher priced market down and similar to previous years with higher interest rates. Sam Khater, Chief Economist at Freddie Mac, elaborates:

“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity…However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”

As we head into fall many Buyers have been wondering whether the demand will fall and it will be a less competitive market. On the contrary, the demand has not diminished and competition will likely only increase as we go through our typical seasonal inventory slow down.

Low Inventory Impacts the Housing Market

Experts believe lack of inventory will hamper the potential that the current housing market has. Danielle Hale, Chief Economist at realtor.com, notes

“The overall lack of sustained new listings growth could put a dent in fall home sales despite high interest from home shoppers, because new listings are key to home sales.”

to the National Association of Realtors (NAR), right now, unsold inventory sits at a 3.1-month supply at the current sales pace. In the Tahoe Truckee area inventory is at an even lower supply level! We’re running at about 2 weeks of inventory. Currently in Truckee there are 88 single family homes listed for sale and 156 in escrow! Under $1 mil there are 96 in escrow and only 20 currently listed!  A balanced market has 6 months of inventory to meet buyer demand on homes for sale. We’re far from that.

Housing Market Driving the Economic Recovery

While inventory is low creating a huge challenge for buyers, it has been good for the economy. When the pandemic first hit the U.S. and many people were under shelter-in-place orders many experts believed that the housing market was about to take a huge hit. Instead it has proved to be a driver in the economic recovery and has shown insulation to the broader economic downturn.

Mark Fleming, Chief Economist at First American, declared last week:

“Since hitting a low point during the initial stages of the pandemic, the only major industry to display immunity to the economic impacts of the coronavirus is the housing market. Housing has experienced a strong V-shaped recovery and is now exceeding pre-pandemic levels.”

Is this good for Buyers or Sellers?

Both! Sellers are able to get the most for their homes that they ever could have in many markets. Yet interest rates are at historic lows which keeps the overall cost of buying  lower than it was last year. While inventory is a problem, the high prices Sellers are getting continues to bring new homes on the market and is influencing a lot of people to sell earlier than maybe they would have anticipated.