When the COVID-19 pandemic first made waves in the United States, many industries were affected in some form. Many businesses had to shut their doors for several weeks in order to help slow the spread of the virus and others had to drastically alter the way that they operate. The real estate industry never had to completely stop, but the processes surrounding it were affected. One major burden that was put upon this specific industry was an inventory shortage that not only affected new builds, but also renovations. This is how the industry shortage continues to affect real estate in the United States.
What is Causing the Inventory Shortage
In the beginning of 2020, when COVID-19 first started making waves across the globe, businesses were closing their doors as more people became infected. A lot of these businesses provided lumber, machinery, hardware, and other building materials that were necessary in both building new houses and updating existing ones. The lack of materials caused delays in construction in many countries and continues to do so. Even though some countries are beginning to return back to “normal” due to the vaccine, others are still struggling. We will likely continue to see an inventory shortage in the upcoming months.
Many regions, especially big cities and popular destinations, are in what’s known as a seller’s market. What this means is that in these specific areas, the supply of homes doesn’t meet the demand of the amount of people looking to buy. This kind of market increases the competition for potential buyers and is even further exacerbated when the production of new homes is moving slowly. If there aren’t enough houses being built or being renovated quickly enough, then it’s going to become harder and harder to purchase a home in most areas. And, the properties that are placed on the market are going to go through a fairly speedy home sale.
During the real estate process, there are a lot of steps that need to be taken before a buyer officially closes on a home. If a buyer is purchasing a home that someone has already lived in, then there will need to be an inspection to make sure that the home is sound. If the house does not pass the inspection, it will need to undergo renovations to get it ready. Because the supply for building products are low, some renovations might take longer than normal to complete. When picking a real estate agent, choose one who is familiar with contingencies surrounding delays caused by the pandemic. Road bumps are likely to happen, and having a plan for them is key.
These delays will also affect new builds. Buyers often have a move-in date provided by the construction company or real estate agent who they are working with on their home. If you are waiting on your home’s construction, add some buffer to your planned move-in date in case of supply issues.
While the inventory shortage might cause some issues with your real estate timeline, it should not be cause for worry. According to top agent insights, the next few months are going to be big for real estate! Whether you are buying or selling, find a trustworthy real estate agent and be patient with any delays or roadblocks that might come your way.