Low Housing Inventory in 2020

If you’ve been remotely interested in the real estate market, you’ve certainly noticed a drastic reduction in available inventory. The last few years have been heavily skewed towards a seller’s market as high supply and low demand have kicked up the competition, but this year’s numbers are staggering!

The biggest factor in causing the housing shortage is simply a lack of sellers willing to put their homes on the market.

When we dive deep into the stats, Sacramento County and surrounding areas have about half of the inventory as we did at the same time last year. While there is quite a lot to unpack here about seller motivations, a recent study showed that owners are staying in their homes nearly twice as long as previously reported. A good chunk of the conversations we are having with owners about why they are staying put is simply because there isn’t anything else for them to move to—a housing shortage created by a housing shortage?!

Buyer demand is gobbling up everything that is on the market.

Interest rates are historically low, and the return of down payment assistance (DPA) and grant programs are too enticing to pass up—even if it means competing against several other buyers. Another strong factor regarding demand is migration. As work from home and telecommuting has gained in popularity the last few years, we are seeing it happen at record numbers during the pandemic. The once coveted coastal communities are actually experiencing a decline in sales volume as those residents seek housing and a lower cost of living inland.

New construction is lacking.

When the bubble burst nearly a decade ago, the new construction industry picked up and left town. The lack of jobs and opportunities amidst a poor economy dried up the workforce, and we never saw it come back to full strength. And it’s nowhere close to where it needs to be to fill the demand of our current market. Take a look at this graphic showing the ebb and flow of new construction stats.