Before I get into the meat of my argument, I’d just like to point out that (obviously) this is an opinion piece and should not be taken as advice or fact. I shouldn’t have to make that disclaimer, but I also know we live in a litigious society that needs more and more disclaimers. That out of the way, let’s begin…
TLDR; “Until Sellers start pumping in more inventory, Buyers will be left with less options and continue to compete over good opportunities.”
Current Market Conditions
As my April market recap noted, our first month of quarantine had some reassuring qualities to it. On the Buyer’s side, there were obvious effects due to physical restrictions, unemployment, and financial insecurity. However, since it was across the board, Sellers were also affected by the exact same conditions. In a sense, it was like a holiday market, but instead of everyone being distracted by Christmas, we were all distracted by the virus. Reassuringly, that meant we didn’t have the recession that some were expecting in the housing market and overall median prices rose year-to-year.
The Same Market Drivers Are Still Affecting Homebuying in Hawaii
Before the quarantine hit, Hawaii was experiencing a market of high-demand vs. low inventory. A classic economic scenario that will lead to higher prices as Buyers have fewer options to choose from and are forced to bid against other Buyers to get what they want. Being an island market, with limited physical land space, Oahu will always be tight on inventory as long as the population and economy grows.
Since the quarantine has affected both Buyers and Sellers, there has not been a swing benefiting inventory. Sellers, hesitant to see where the market is going, are not listing at the same pace they were last year and adding to the inventory available. Instead, Buyers are left choosing from thinner inventory that they still have to compete over. If this trend continues, we will not only abandon a lot of eager Buyers, and limit the movement that real estate provides to the overall economy.
Seller’s Will Dictate the Coming Real Estate Market
The most obvious statement I will ever say is, “you can’t buy anything if there’s nothing to sell.” However, I want to explain the nuance to that statement because it will be the confidence of Sellers that will drive the future real estate market. Most Sellers are rightfully nervous about going through the process of preparing and listing their home for sale, if it means that they are entering a market with less competition. Unfortunately, that means that less new listings will create an even-tighter market and add more stress to purchasable inventory. We got a taste of what that will look like last month, as median prices rose amid a fall of inventory.
So am I asking Seller’s to jump into the housing market without thought? Of course not. Selling a piece of property is a personal and nuanced decision for each individual. However, since the market needs inventory for Buyers to buy, Sellers hold the key to the future of our housing market. Until they start pumping in more inventory, Buyers will be left with less options and continue to compete over good opportunities.