Time to panic? What happens to the real estate market if there is no housing inventory?
While real estate brokers are congratulating themselves and their agents on record numbers of sales and closings in 2021, buyers and their real estate agents are quietly worried that 2022 will be quite a challenge. Is it the sound of panic? Not yet, but it looks 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 is not news. Our Tarrant County Tuesday column has been predicting, prognosticating and preaching about the lack of housing inventory in Tarrant County and the greater Dallas-Fort Worth Metroplex for some time. Since March 2020 (when COVID closed its grip on the United States), the number of homes available for sale has gone down, down and down.
The GFWAR report indicates that there is currently only seven-tenths of a month of housing supply in Fort Worth and Tarrant County. This means there are only enough homes available to make seven-tenths of a month’s sales.
A balanced real estate market used to be considered six months of inventory. My math education at Boerne High School may not win me any competitions, but I certainly know that seven-tenths of a month is a lot less than six months.
So that’s a big problem. We’ve been hearing about low stocks for almost two years. We discussed supply chain issues for new home construction and the delays builders face in fulfilling their orders and obligations. We have heard time and time again that prices are rising and that this is a seller’s market.
Why is there all of a sudden a sound of panic among real estate agents and buyers? What is different from before? Reality sets in at all price ranges.
Sale, but no sale
Recently, I’ve heard several stories from Tarrant County brokerage realtors of sellers who put their homes on the market and then take them off the market – despite getting exactly what they ask for…or more. !
A house in a prestigious gated community in Fort Worth recently came on the market at a very high price (basically more than the house should value). An overpriced offer was made immediately by a cash buyer, but the seller decided to take the house off the market because he had no intention of moving as soon. All of this happened in less than 24 hours.
This type of scenario happens again and again these days in all price ranges. Sellers are happy to get a high price for their homes, but unless they have a plan and a place to go next, they’re unwilling to move forward.
If sellers can’t sell, buyers can’t buy. Although it seems fairly obvious, we have never experienced this kind of deadlock in the housing market.
If there are no houses to buy and the rents are astronomical, we have a problem.
Truly, 2021 has been a great year for many real estate agents and brokers. Records have been set and bottles of champagne uncorked, but those same real estate agents and brokerages are beginning to feel the pinch of the now and the what’s to come.
There is no magic wand or potion to make this problem go away. It’s not COVID or the weather or the month of the year. If people don’t start selling their homes, this could be the weirdest and toughest year in real estate since the recession. Is it possible to have a reverse recession? Where there is a lot of money at stake and a lot of players (buyers) but not enough sellers?
Yeah. If someone tells you that this real estate market is fantastic, they are lying to you. There isn’t a buyer or a real estate agent or a broker manager or a lender or a title company or anyone involved in the door-to-door sales business that doesn’t quietly start making a noise that sounds a lot like the panic.