Market Update

The Lowdown on Low Inventory

Melissa Walter


I've been using the term 'low inventory' on a daily basis since 2019 and there are three questions I answer on a regular basis:

How low is the inventory?

A WSJ article this past weekend estimated the housing shortages to be between 7.3 million units short and 1.7 million short.
The estimates were as follows:
National low income housing coalition: 7.3 million 6.5 million
Fannie Mae: 4.4 million
Up for Growth: 3.8 million
John burns Research and Consulting: 1.7 million
The reality is probably somewhere in the middle of those numbers. To put the current housing inventory in perspective, in 2007 our national inventory spiked to 4 million active units. Currently we have less than 1 million active listings.

Why is the inventory so low?

It's been the perfect storm:
  • The pandemic spurred migration from neighboring states
  • Low mortgage interest rates
  • After the 2008 financial crisis builders slowed their pace of building
  • Homeowners now stay in their homes longer:
    • the national average used to be 5-7 years, now it's 11-13+ years
    • for those who have paid off their homes and/or locked in low interest rates, it's cheaper to stay in their current home
  • Many renters have been driven to purchase homes so they could stabilize their housing budget
  • Home sale contingencies are a nonstarter in this market. Some potential sellers who need the equity out of their current home to purchase their next home are at a standstill.
  • Corporate investors have been buying single family homes and turning them into rentals


What strategies can you use to get a home in this market?

The past 4 years have been challenging for home buyers in the Greater Philadelphia area. As home inventory decreases, competitive offers increase. Below is a list of strategic options I review with my clients before we start looking at homes:
      • Offering cash is typically more desirable to a seller than receiving an offer with a mortgage contingency
      • Consider shopping 10% under budget. In most local areas, competing offers typically escalate 10% over asking price
      • Waive inspections (this is not my personal recommendation, this is just the state of the market we're in)
        • Calculate the risk of repairs against the future price of the home if prices continue to escalate 10% yearly
        • Waive inspections on only the most pristine and/or newly built properties
        • Purchase a home warranty including sewer and water line coverage
        • If waiving inspections is a nonstarter for you:
          • Shop on Holiday weekends when competition lessens a little
          • Make offers on stigmatized properties
          • Consider purchasing new construction (Work with a buyer's agent so that your interests are protected)
      • Waive the appraisal and/or offer to cover the gap between the appraised price and the purchase price

      • Waive the mortgage contingency if you can show enough liquid assets to purchase (Waiving the mortgage contingency doesn't preclude you from getting a mortgage)
      • Consider offering a free leaseback to the seller as needed
      • Consider offering to pay both sides of the transfer tax
      • Consider offering to pay for the township Use and Occupancy inspection repairs (if applicable)
      • Work with a realtor who can help you search for off-market properties
      • Revisit your wishlist, be flexible with some of your search criteria


Current Homeowners: If you  need the funds out of your current home to purchase your next home:

      • Consider a Home Equity Line of Credit (HELOC)
      • Sell and then rent temporarily


Please reach out if you have real estate questions. For over 12 years I've helped sellers and buyers negotiate real estate in the Greater Philadelphia area, including Montgomery, Bucks, Chester, Delaware, and Berks counties. Having lived in 4 of the local counties, I am skilled in helping my clients navigate their options. 




Melissa Walter


Certified Residential Specialist (CRS)

Accredited Buyer's Representative (ABR)

Short Sale and Foreclosure Resource Certified (SFR)



Compass RE

4 E Montgomery Ave

Ardmore PA, 19003

o: 610.822.3356

m: 484.459.6966

[email protected]

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