Mortgage rates are rising, and the housing market appears to be softening nationwide.
But in many U.S. markets, would-be buyers are facing a big problem: there’s just nothing to buy. Housing inventory—the number of homes on the market—has been falling since the rebound from the Great Recession as investors snapped up homes and as more older Americans decided to age in place.
Some housing analysts predicted that inventory would start to climb as builders scrambled to finish more new homes. But in markets where there’s not a lot of new construction, including Hartford, Conn. and Buffalo, N.Y., inventory is hovering near historic lows, according to data crunched by Redfin and provided to TIME.
“I don’t think I’ve ever seen it this bad,” says Becky Koladis, who has been a real estate agent in Hartford for 23 years. “There’s just not a lot to choose from.”
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In December, Hartford had just 1.4 months of housing supply, meaning it would take just 1.4 months to sell all the homes on the market at the current pace of demand. Hartford has had less than two months of supply since mid-2021, according to the Redfin numbers; in February 2019, by contrast, it had 5.9 months’ supply. In decades past, economists would say that a balanced housing market has between four and six months of supply, “but we haven’t seen that since the bottom of the last housing market,” says Daryl Fairweather, Redfin’s chief economist.
One reason inventory is so low nationally is that many homeowners were able to lock in record low interest rates in 2020 and 2021. Mortgage rates have skyrocketed since then—the rate for a 30-year fixed mortgage reached 6.7% on March 9, nearly double that of a year ago, according to Freddie Mac. That means that homeowners who bought or refinanced with low interest rates are reluctant to sell their homes and buy another with a mortgage with a much higher interest rate.
The low inventory makes house hunting an even more painful and emotionally charged process than usual, because buyers are finding that there just aren’t that many options. They have to choose between paying a high price for the inventory that is available, or waiting—potentially for a long time.
There are factors at play that make some markets especially brutal. In January, according to Redfin, the places out of the top 100 most-populated metro areas in the country with the lowest inventory were Rochester, N.Y. (1.2 months’ supply); Buffalo, N.Y. (1.4 months’); and Allentown, Penn. (1.5 months’). Rounding out the top ten were Grand Rapids, Mich.; Worcester, Mass.; Greensboro, N.C.; Hartford; Boston; and Montgomery County, Penn.
Aside from Boston, these regions aren’t the ones typically mentioned in the same sentence as “housing crunch,” but there are a few reasons that these Northeastern metropolitan areas are seeing such low supply, Fairweather says.
First off, they’re seen as relatively affordable, so people who have been priced out of places like New York City are heading to smaller cities to be able to own a house. Koladis, the Hartford real estate agent, says she’s seen a lot of buyers relocate to Hartford from New York, New Jersey, and even California.
Second, they’re places in the dense Northeast where there’s not a lot of land to build on, and so there’s not a lot of new construction happening. The U.S. has increasingly come to depend on new construction for inventory—one in three homes for sale right now is new construction, Fairweather says. In 2021, the rate was more like one in four. The current dependence on new construction means that markets where there has been a lot of building in the last few years have a lot more inventory. That includes Austin, Nashville, and Dallas, for instance, three markets that saw prices jump in the last few years because there were bidding wars on existing homes. As more inventory comes on the market, prices level off.
Read more: The U.S. Economy Is Doing Too Well. Why That’s Bad for People Who Aren’t Rich
One other reason that there’s low inventory? The influx of investors who have bought properties, including single-family homes, to rent. Investors bought 24% of all single-family homes in 2021, up from around 15-16% each year going back to 2012, according to a Pew Stateline analysis.
“Institutional investors are…making this market more difficult,” says Peter Chabris, a real estate agent in Cincinnati, Ohio, where there is also very low inventory. Three homes went into contract in Cincinnati in February for every new one that was listed, he says.
“It’s stressful, it’s highly competitive, and it’s emotionally challenging,” he says, about buying a home right now.
It’s something buyers across the country are going to reckon with as spring—the traditional home-buying season—approaches and mortgage rates continue to rise. The Federal Reserve has steadily raised interest rates in an effort to tame inflation, and Fed Chair Jerome Powell suggested, when testifying before Congress on March 8, that the Fed would likely need to continue to bring interest rates higher than originally anticipated.
Winifred Jones has been going through the emotional roller coaster that is trying to buy a home for six years. She wants a multifamily property in Hartford, Conn., so that her adult children can live with her but also have their own space. Every year, she says, there’s been more and more competition, and more investors coming in and outbidding her with cash. She’s so sick of getting outbid for homes and then seeing them come up for rentals a few months later that she and her realtor are thinking of trying to find homeowners who are going to sell before they officially list their properties for sale. Until then, she says, she has little optimism she’ll find something.
“There’s just nothing to bid on,” she says. “It’s either way overpriced or not worth it for the money.”
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