When we look at the trend of homes for sale in Taylor County it's clear to see that there's a shortage of properties, but when should that change?!
Before we can figure out when more homes should be on the market, we need to understand supply and demand. When it comes to any commodity being bought and sold the price will always be affected by supply and demand. When supply of a commodity declines, and demand remains the same or increases the price of the commodity will increase. When supply increases with demand remaining the same or declining then the price of the commodity will decrease.
Here's a link to a short YouTube video that may better explain it:
In regard to real estate, home prices rise when there are more buyers than homes available and home prices fall when there are more homes than buyers for them. It's important to remember that these changes in supply and demand feed each other creating an economic cycle.
Economic cycles are fairly self-sustaining, demand increases and surpasses supply causing prices to rise, the increase in price deters buyers reducing the demand which allows supply to increase which reduces prices and the cycle starts over.
The government has one major tool they can utilize to help motivate these cycles one way or the other and they do this by adjusting the cost of borrowing money via the federal funds rate. As the fed rate increases the prime rate of banks typically increases in kind resulting in an increase in the cost of borrowing money from banks.
Right now, mortgage interest rates are on the rise and have been since August of 2021, additionally the fed has already indicated they intend to raise rates three more times in 2022 to combat inflation.
This coupled with the seasonal decline of demand from November-March should result in a much-needed increase in homes for sale beginning in March. Typically, we could see this increase extend through August before declining but when we take the increase in interest rates into account, we should see a much better selection of homes available for a more extended period of time.
For reference this is a graph of the typical Taylor County market cycle. You can see the rise in new listings every summer for the last three years, we should expect the same cycle this year but with a greater increase and more sustained inventory levels afterward.