Low home inventory and rising construction costs impact local real estate market

LOW HOME INVENTORY

LOUISVILLE, Ky. (WDRB) — The COVID-19 pandemic is having an impact on the Greater Louisville real estate market in more ways than one. Low home inventory and rising construction costs impact local real estate market

Industry experts say a variety of factors have made the market great for sellers and pretty challenging for Low Home inventorybuyers.

“Inventory shortage has to be the primary kind of market driver right now,” said Jay Pitts, principal broker and owner at Remax Premier Properties. “It’s an extreme seller’s market.”

Pitts said the Greater Louisville real estate market has been dealing with an inventory shortage for several years but nothing quite like this.

“It’s hard to imagine a scenario where there is fewer homes on the market for sale,” He said.

Pitts said there’s less than a two-month supply of inventory. He said in a balanced real estate market, there’s about a six-month supply of inventory.

With interest rates at historic lows, he said it’s still a good time to buy. It just might be harder to find the ideal property at the right price. Buyers are facing rising prices, bidding wars, tense negotiations and need to be decisive.

“When you find the perfect property, making an offer almost instantaneously is what’s required,” He said.

And building experts said the local new construction market is trending up.

“We have seen a lot of people who, we think, because they have been at home for so long … since March, that people are looking to build a new home, remodel their existing home,” said Juva Barber with the Building Industry Association of Greater Louisville.

The home construction industry is also facing its own issues related to the pandemic.

“We saw lots of our suppliers also have to shut down, and that was everything from appliances to counter top fabricators to even things lumber mills,” Barber said. “We are actually today feeling the effects of those shutdowns.”

Supply shortages have had a major impact and are driving up the price of new homes.

“Our hope is that we will see this peak, and prices will start to drop in lumber as those mills come back online,” Barber said.

If you’re thinking of building, experts say the low mortgage rates might help offset supply costs.

“Don’t rule it out just because there’s those increases right now,” Barber said. “Take advantage of those mortgage rates while you can.”

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