BuyersSellers June 27, 2017

Low Inventory: 5 Reasons Why The Real Estate Market Isn’t Meeting Demand

Over the past year, real estate inventory available in the market has continued to become more and more scarce. Since the economy is getting a bit better with time, more people are looking at purchasing a home but they are finding that there are not many available homes. These are a few reasons that have led to a low inventory in the market. 


  • Less people are selling their homes. When people who already own a home do start to look at purchasing a new home, they are not always looking to sell before buying again. In fact, more people are holding onto their homes than ever before and choosing to rent their properties when they purchase a new one.
  • Some homeowners are still underwater. Even though the economy is getting better, there are still many homeowners that are underwater when it comes to their mortgage. This results in people choosing to not sell their properties and move into something bigger, even if it is something they need. 
  • High prices are preventing people from moving out of their starter homes. The higher price of mid-level homes are preventing those who are not underwater with their mortgage from moving. While they may be in good shape with their current home, they do not have enough to actually get something better. 
  • There is no incentive for current investors to sell their properties. When foreclosures were prevalent, many investors with the ability to purchase with cash did exactly that. Now that foreclosures are not as widely available, these investors do not have any incentive to sell their properties for better ones. They are enjoying the prevalent cash flow instead. 
  • The homes available are not in line with the prices that first time home buyers can afford. There is a low inventory of starter homes that are affordable, especially for people just now interested in purchasing homes. This price gap is causing an issue and it is further influenced by the strong sellers market. 

These five reasons are important on their own but they also influence each other. Together, they are creating this low inventory that is scary in the market. Home prices are rising as a result and there will be less and less people who can afford to purchase a home with each passing month. However, all hope is not lost. If you are interested in seeing what is available and looking at your options, contact us today.