More homes were listed in the Bay Area in the summer of 2021 than we had seen in the past year. In the real estate industry, we call these listed homes “inventory.” When more homes are on the market, there is more inventory available. This increased inventory naturally changes the market dynamics.
But what brought about the increased inventory in 2021? And what does it mean for buyers and sellers?
Why Did Inventory Increase?
Inventory in 2020 was exceptionally low nationwide. This was due to a combination of under-building and low turn-over as more homeowners decided to stay in their homes longer (either because of uncertainty amid the pandemic, the desire to age in place, or because they were afraid they wouldn’t be able to find a new home).
But by June 2021, new listings increased 5.5% year over year and 10.9% compared with May as more homeowners chose to list their homes for sale.
There are several reasons inventory increased from 2020 to 2021:
Home values have increased dramatically nationwide, making it more enticing for owners to sell.
As working from home became a long-term possibility for many office workers, some owners have decided to sell their homes in high-value areas and relocate to areas with a lower cost of living.
As inventory increased, owners became more confident in their ability to find a replacement home, so they are more comfortable listing their homes for sale.
It’s also likely that more sellers felt comfortable having buyers tour their homes as COVID-19 vaccines rolled out through the area.
So What Does More Inventory Mean for Buyers?
As long as buyer demand remains consistent, things will get a little easier for buyers as inventory increases. You’ll have more homes to choose from, meaning you can be slightly more discerning and take a little more time to consider your options. It also means you’re less likely to encounter competing offers, and you’ll have a little more leverage in negotiations with sellers.
But you should still have a sense of urgency in today’s market. Homes might not be selling in two days to an all-cash buyer after a fierce bidding war, but it’s still a competitive market. You still need to be decisive, act quickly, and bring your best offer if you want to secure a home this year and lock in today’s low interest rates.
And What Does More Inventory Mean for Sellers?
For sellers, more inventory means more competition. Buyers will have more options, so you need to make sure your home stands out in the crowd. You’re also less likely to see bidding wars and offer prices substantially over the asking price when inventory increases.
But there’s still time for you to capitalize on the extreme seller’s market of 2021. Sellers still have an advantage because buyer demand still exceeds available inventory as we prepare for the autumn season. Use these market conditions to get a high-priced offer on your home while you still can.
Are you on the fence about buying or selling? The team of experienced professionals at Sequoia Real Estate has the market knowledge and industry insight to help you make informed decisions. Contact us today for a free, zero-pressure consultation