Spring is historically the best season for homebuying, but with limited housing inventory driving property prices up, prospective buyers are having to fiercely compete amid the shrinking availability of listed homes. This inventory challenge is very good news for house flippers, especially for those who are talented at finding off market homes for sale.
Currently, the U.S. housing market is short about 3 million homes, according to the National Association of Realtors. Industry experts predict it will be at least mid-decade before new construction and existing home sales begin to catch up with demand, meaning this housing inventory challenge will be with us for the next several years if not longer.
Baby Boomers With Off Market Homes for Sale
Frank Nothaft, chief economist at CoreLogic. Nothaft predicts that as coronavirus vaccinations rise, a number of baby boomers who have waited out the pandemic to make retirement plans will be looking to sell their homes. Savvy house flippers who are driving for dollars or are working with wholesale real estate investors to find fix and flip properties in need of a facelift, should also consider reaching out to boomers who could be a great source of off market homes for sale.
“The median age of owner-occupant homeowners is 58,” Nothaft said. “I think what we will see emerge a little bit in the spring but especially in the second half of this year” is those baby boomers who have gotten vaccinated will be weighing whether it is time to sell.
Home Prices are Soaring
In this tight market, fix and flip investors are benefitting as limited supply and low mortgage rates send home prices soaring. Realtors across the country report they are receiving multiple offers on nearly every home listing, and home sellers are getting their asking price and then some.
Nothaft points out that limited supply and low mortgage rates “has led to really eye-popping house price gains.” Nothaft predicts these conditions will persist. “I see these conditions continuing, a tight housing market favoring sellers rather than buyers,” he said. “A market that’s characterized by low mortgage rates, availability of credit, but not good availability of houses.”
Rising Mortgage Rates May Nudge More Buyers Into the Market
Availability of credit remains a strength in the current market. After reaching historic lows in January, mortgage rates do look to be on an upward trajectory for the near future, but that may actually nudge even more buyers into the market. Prospective buyers who are watching the rates rise may want to get into a mortgage while rates are so affordable.
“I do expect that we’re going to continue to see gradual upward pressure,” Nothaft said of rising mortgage rates. “I don’t think we’re going to see mortgage rates get back to 3.5 or 4 percent until next year,” he added. “It’s not as good as it was the first week of January, but they’re still really, really low.”
The Know-How to Find Off Market Homes for Sale Will Pay Off
All of these housing market factors make for a potentially profitable next few years for fix and flip investors looking for homes with profitable ARV, especially for house flippers who know where and how to acquire off market homes for sale.