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Monday, April 8, 2013

What exactly does a low housing inventory mean for you?

Real estate inventory
Property prices rise when supply is low and demand is high
By Ross Herman

Major housing markets across the United States are seeing low numbers that haven’t been reported since 1999. The Wall Street Journal reports that most large cities are seeing a decline in listings. Many homeowners wait until the spring to list their homes but, again, the listings haven’t quite picked up when they normally do.

The most modest declines have been in Orlando, Phoenix, Atlanta and Fort Lauderdale. Some of the more drastic declines have been seen in San Francisco and Seattle. 

The Twin Cities are no exception to the inventory decline, but now they are seeing a different change in the housing market; a decrease in closed home sales. It appears the more desirable real estate has been picked over, leaving buyers wanting more and not wanting to close sales. It doesn’t mean all bad news for the Twin Cities.

The area’s two main real estate associations are confident that closed sales will increase in the spring and summer. Although it doesn’t look like the area’s housing market will take a turn for the worse, it could mean that real estate prices in the Twin Cities area could rise even farther.

So, what does all of this mean for you? If you are a seller, it could mean that you could be seeing a fight for your property. Multiple offers coming in might make it easier to sell your home at a price you were hoping for.  And for buyers? Finding the right property could be tricky.

A decline in housing inventory also means a decline in desirable housing options. Be prepared to fight other buyers and pay more than you originally thought. And if your house sells faster than you thought it would, you’ll need to be ready to pack up and move out.

In the Twin Cities and according to the rest of the national trend, it looks like it’s a seller’s market. While some analyst think this trend is moving in the right direction for the economy, it could make your real estate hunt a bit more challenging.

What can you do to make the process smoother? Part of the reason closed sales declined in the Twin Cities is because heighted credit standards have made it harder for buyers to secure financing. If you want to wait to see if the housing inventory will change, it’s not a bad idea to start working on those credit scores.

About the Author: Ross Herman is a real estate and investment expert of the Twin Cities region in Minnesota, and a community blogger for www.webuyuglyhousestwincities.com

Image license: Chris Potter, CC BY 2.0