Housing supply shortage leading to increased competition

In prior years, competition in the housing market was largely a function of a flourishing market. Better overall market prices motivated homeowners to make their property available to buyers, who had the financial security in a well-functioning economy to make competitive bids against others for the homes they desired.

However, according to a recent article published by The Wall Street Journal (WSJ), bidding wars have returned to the housing market. However, in this case, competition is rising because of supply shortages in the marketplace.

According to WSJ's quarterly survey, the inventory of homes that were listed for sale has dropped in each of the 28 markets that were analyzed. Consequently, housing markets such as in Sacramento, Phoenix, Washington D.C. and San Francisco all have inventories that could reportedly be sold out in less than half a year.

Even traditionally flush housing markets like Chicago and Long Island are experiencing the number of houses available for purchase steadily decreasing.

"Inventories are declining for a number of reasons," according to the WSJ article's author Nick Timiraos. "Some sellers, unwilling to accept prices that are still down from their peak by one-third, are taking their homes off the market in anticipation of higher prices down the road. Meanwhile, investors have been outmaneuvering consumers for the best properties, often making cash offers that are quickly accepted by sellers."

Considering the downward trend in the housing market's inventory, lenders may be experiencing uncharacteristic pricing strategies based on citizens outbidding one another for the few pieces of real estate currently available. As such, lenders can enhance their ability to keep track of evolving market trends by partnering with a company that can provide commercial loan and loan amortization software.

By taking this measure, lenders will be able to keep better track of their clients and develop easily-trackable payment schedules based on a specific interest method.