Supply Shortage Intensifies Market Competition

Everyone likes to talk about the housing market in relation to how it has crashed, however there are many markets that are now experiencing a different problem. Due to the market competition for some homes, there has actually become a supply shortage of homes to buy.

According to Realtor.com, the listing inventory is down by about 20 percent from 2011 to 2012. The for-sale home inventories have declined and as a result, the average time a home spends on the market has decreased, too, simply because there are more people interested in buying the homes.

Due to high costs and low sales, construction has become an issue as well. There are not many new construction homes being built right now. Forbes has estimated that the number of new construction homes are somewhere near a 50-year low.

So what’s going on with the shortage of homes? Not all markets are experiencing it, however, especially on homes that are listed below $250,000, there are a lot of interested buyers. It’s not uncommon for 10 or more offers to come in on a single listing. This makes it harder for new home buyers to enter the market because of having to compete with each and every home they come across.