Get All Access for $5/mo

The Real Estate Housing Market Is Shifting: Too Many Homes, Not Enough Buyers As mortgage rates surged, prospective homeowners were priced out. Now there are not enough buyers for an increasing number of homes.

By Madeline Garfinkle

Opinions expressed by Entrepreneur contributors are their own.

The housing market is shifting, and faster than builders and sellers can adapt.

During the pandemic, low mortgage rates and increased demand led to a surge in the housing market, causing prices to soar and competition to rise. However, the tight market led to sky-high prices and an eventual rise in mortgage rates, which ultimately priced out millions of would-be buyers. Now, builders are faced with an excess of unsold homes, Bloomberg reported.

The once nationwide housing shortage — coupled with the boom brought on by the pandemic — pushed the market to a pressure point. Home prices rose by 20.6% year-over-year in March of 2022, marking the largest increase in the 30 years of record-keeping, according to the Joint Center for Housing Studies tabulations of CoStar and CoreLogic Case-Shiller Home Price Indices data.

However, by early July, the supply of homes versus demand had plunged to the lowest level since 2012, according to a survey from the National Association of Home Builders. Now builders and sellers are scrambling to adjust to the dramatic market shift as buyers back out of contracts in record numbers.

"It has become a very competitive market for builders where they are trying to offload any standing inventory," Ali Wolf, chief economist for Zonda, told Bloomberg. "We may see a period where supply may actually exceed demand for a while in some of the markets that were the most feverish over the past two years."

Related: 4 Reasons Why Home Ownership Is Still a Fantastic Investment

The plunge has been months in the making. In early June, real estate firms Compass and Redfin began rounds of layoffs, anticipating the market drop that's now happening in real-time.

Kevin Brown, a Houston, Texas realtor, told Bloomberg that he has witnessed a significant shift in the market. What used to be jam-packed days of back-to-back appointments has dramatically slowed, and now he has five new homes completed for sale, another 55 in construction, all unsold.

Still, the disparity between prospective buyers and unsold homes presents a new challenge for real estate — but possibly a shift in buying power prospective homeowners had been waiting for.

In June, as home and rent prices skyrocketed, the annual income required to qualify for a median-priced home increased by $28,000 since the previous year, according to Harvard researchers, but with an excess of empty homes, prices are already dropping.

Related: New Reports Suggest Home Prices Could Begin Dropping Soon

Madeline Garfinkle

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Leadership

Visionaries or Vague Promises? Why Companies Fail Without Leaders Who See Beyond the Bottom Line

Visionary leaders turn bold ideas into lasting impact by building resilience, clarity and future-ready teams.

Science & Technology

5 Automation Strategies Every Small Business Should Follow

It's time we make IT automation work for us: streamline processes, boost efficiency and drive growth with the right tools and strategy.

Marketing

5 Critical Mistakes to Avoid When Giving a Presentation

Are you tired of enduring dull presentations? Over the years, I have compiled a list of common presentation mistakes and how to avoid them. Here are my top five tips.

Business News

Former Steve Jobs Intern Says This Is How He Would Have Approached AI

The former intern is now the CEO of AI and data company DataStax.

Side Hustle

'Hustling Every Day': These Friends Started a Side Hustle With $2,500 Each — It 'Snowballed' to Over $500,000 and Became a Multimillion-Dollar Brand

Paris Emily Nicholson and Saskia Teje Jenkins had a 2020 brainstorm session that led to a lucrative business.

Green Entrepreneur®

How Global Business Leaders Can Build a Sustainable Supply Chain

Businesses can build sustainable supply chains by leveraging technology to reduce environmental impact, optimize resources and track emissions while balancing operational efficiency and sustainability goals.