A Look at the Low Inventory in 2022
The real estate market is experiencing a low inventory issue right now nationwide and here in our Northern Worcester County area as well. There are many factors contributing to the low inventory other than pandemic related concerns. The great news is, we have very low interest rates right now, which even though they are starting to climb a bit, they are still historically low. According to Freddie Mac, The Federal Home Loan Mortgage Corporation, the rates in 1981 reached a high of 18.45%. So, the current rate of approximately 4% (on the day I am writing this column) is extremely low. This has encouraged more people to purchase homes instead of renting. It often is less expensive to buy and pay a mortgage payment rather than paying monthly rent. Plus, the buyer is building equity for when they sell. Also, younger people are buying homes. Gone are the days that buyers feel they needed to buy a home they would live in for 15-20 years. They are not waiting to buy until they plan to stay in one location for many years. Buyers now are looking at this as a 3–5-year plan. They plan to sell in just a few years when their life changes. Buying is not the same commitment it was for previous generations. Another factor contributing to low inventory is older people are staying in their houses longer. In home services assist people in their home, and new technology for families to have food delivered, services in place, stairlift or alterations made to the home, and even safety features are making people feel more comfortable staying home versus moving to assisted living facilities. Lastly, a big factor in the low inventory is the lack of building in the past 15 years. When the economy hit the recession in 2008, builders took a step back from building new construction, this trend of less houses being built and the growing population still looking for new homes has started effecting the market significantly and builders cannot keep up with the demand. That lack of building and less land available, the increase in cost for building materials and labor will make it hard to catch up to the demand.
The Sterling and Princeton markets are still strong, and even with the low inventory problems, houses are still selling at a good rate. I am constantly looking at the markets in Sterling and Princeton and wanted to share some data from 2000 through 2021 that I found interesting. The average number of single-family houses sold in Sterling from 2000-2021 was 75 houses, Princeton was 35 houses. The lowest number of houses sold in one year in Sterling was in 2009 we only sold 43 houses in town, in Princeton the lowest number was 17 houses which happened in both 2008 and 2010 during the last recession. The highest year in Sterling was 2017 with 95 single family houses sold and Princeton was 2019 with 58 single family homes sold that year. Interestingly even with all the low inventory talk, in 2021 Sterling sold 86 single family homes. This is still well over the 75 number averaged over the past 22 years and Princeton sold 42 homes last year, still over the average of 35 in Princeton as well.
The real problem with inventory is not in how many houses sold, it is how many are available at any specific time to buy. Houses are typically selling in less than a week if priced correctly with multiple offers in most cases. This is making it hard for buyers to find something that fits their size and budget.
2022 looks like it will be another busy year in real estate for both buyers and sellers and I am always happy to help people in our community navigate this ever-changing market. If you have any questions or need advice, please feel free to call/text me at 978-407-2568 or email email@example.com.