The severe shortage of homes for sale is upending the sales calendar for the whole housing market. Spring has historically been the busiest buying season, but as competition for homes heats up across the country, January is the new April. Spring starts now.
The numbers are telling. From 2015 through 2018, the peak month for average views per listing on Realtor.com was April. January lagged by a full 16%. In 2019, however, January was the busiest month on the site in 20 of the largest 100 metropolitan markets.
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Those markets included New York City, Los Angeles, Chicago, Dallas, Houston, Seattle, San Francisco, Atlanta, Denver and San Jose, California. In 2018, January was the busiest month in just three of the largest 100 markets. This year, the expectation is that January will be the strongest month in even more markets.
“As shoppers modify their strategies for navigating a housing market that has become more competitive due to rising prices and low inventory, the search for a home is beginning earlier and earlier,” said George Ratiu, senior economist at realtor.com. “With housing inventory across the U.S. expected to reach record lows in 2020, we expect to see this trend continue into the new year.”
The number of homes for sale in November, which is the latest reading from realtor.com, was down 9.5% annually, and the supply of entry-level homes, priced below $200,000 was a stunning 16.5% lower than in 2018.
Atlanta’s housing market is particularly spare, especially on the low end. Melissa Fuentes, an Atlanta-area real estate agent, said she expects to hit the ground running with new clients now.
“I’ve gotten at least 30, maybe 30% more phone calls already to start the homes search in January,” said Fuentes. “It’s a race out here, so it’s either they get started fast or they wait until the actual spring market, and they miss out on all the inventory.”
Real estate agents are not usually very busy after the holidays. Some take January off and then start preparing listings in February, but not this year.
“We usually like to wait a little bit to get through the holidays and let everybody get well adjusted, but this year, watching other agents and what they’re doing, it’s full of open houses this coming weekend, so I will be out there at my listing and promoting as well,” Fuentes said.
She said she is seeing a lot more people getting preapproved for mortgages early, as interest rates are still very low. Unfortunately, Fuentes says working with her buyers is getting much more difficult because all the competition is reigniting the heat under home prices.
“At this point, we’re having to search several properties. I’ll take a client to maybe 10 or 15 homes” even ones out of their price point, she said, “and we’re just not finding the houses that they were interested in.
Home price gains had been shrinking in the first half of 2019, but those gains began to pick up again in September and continued in October, according to the latest S&P CoreLogic Case-Shiller Home Price Indices. Price increases are broadest on the lower end of the market, while they are softening slightly on the high end.
With more buyers jumping into the market in January, this year’s spring market will likely see even fewer homes for sale. Current homeowners are reluctant to give up what they have, given how pricey the market is now, so it is up to the nation’s homebuilders to ease the supply crisis. They are increasing production slowly, but have not fully focused on the lower end of the market, where supply is leanest.
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