Can't find a home to buy. There's a new crisis brewing.

Can't find a house to buy...can you believe it? The real estate market may have a different kind of crisis brewing. If you want to buy a house... you can't. There are 8 single family houses for sale in Hugo right now (excluding new construction). The lowest price home for sale is $400,000. Look at the active single family homes on the market in the photo below, there are only 3 houses on the market in Stillwater under $300k. Any house with an a, is sold on a contingency. The homes with just an a are the ones available. (a,s is sold on the sale of the buyer’s property so technically still available but still sold to some degree and many buyers won’t look at these homes.)

The buyer's have certainly disappeared behind their masks but so have the sellers. Uncertainty, stay at home orders and health concerns have dampened both sides of the housing market. But, there are needy buyers and they are fighting for houses to buy. The buyers looking for houses right now, aren't tire kickers and the pickings are slim. Would you go out and look at houses right now if you weren’t looking to buy a house immediately?

Multiple offers are common in homes under $400,000, if you can find one. There are buyers out there, not a lot, but they are struggling to find inventory in especially the affordable price points. This is what might keep the housing market in decent shape for the foreseeable future...a declining market is led by over supply and rising inventory. Supply and demand is the main driver of the housing market. More sellers than buyers - prices fall. More buyers than sellers - prices rise. If you can believe it, we probably have more buyers than sellers right now in the affordable price points.

Am I saying this is a good time to sell your home.? Obviously, no. Surprisingly the housing market has reacted in self preserving way right now. It's gone on pause, especially on the selling side.

The market does change as houses get more expensive. Look at the photo below of homes on the market in Stillwater price between $400,000 and $600,000. 25 homes for sale and 5 of them are sold with a contingency. So, under $300k was 20 homes on the market with 15 sold with a contingency vs. $400k - $600k with 25 homes on the market with only 5 sold. Big difference in availability and buyer demand. I am not even going to look at the over $600k price point because I know the direction it is going.

The big concern to the housing market would be another foreclosure crisis like we had in 2006 - 2010. When banks become sellers they reduce prices until a property sells. It also floods the market with inventory because banks are losing money every month that a houses sits vacant so they are going to sell as fast as they can. That could happen here if the economy doesnt’ recover and the most fragile home owners can’t keep up on their mortgages. But for the time being and if we can find away to get back to a sense of normal, this pause by sellers has kept the housing market in decent shape to emerge from this without a big dip in prices.

It starts at the bottom and works its way up. The upper bracket homes are the first to feel the effects of decreasing buyers as these buyers are move up buyers who sell their existing home and then buy a bigger, better one. If people are uncertain and scared, they are not going to sell the home they are in. They will stay put. That decreases the over $500k buyer pool which causes a negative influence on those prices. So, if theses owners don’t sell their $300k-$500k house, that pulls a lot of inventory off the market in the more affordable price points, which is what is happening now. It becomes a tale of two markets: one a buyers market and one a sellers market.

There are a lot of other factors at play here. Amazing low interest rates (30 yr - 3.31%), tighter lending requirements, fear of the unknown, deflation, inflation, etc. so we will see how this plays out . For now at least, the pause on the housing market is keeping it poised to rebound if we can pull out of this in the next few months.

Stay tuned…