01 Apr Where Have All the Homes for Sale Gone?
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If you’re on the hunt for a new home, you know too well that there are more interested buyers than there are homes to go around. Around the country, inventory issues continue to be a challenge, and levels dropped to 1.82 million homes nationally at the end of 2012. That’s an impressive 21.6% drop year-over-year!
Home prices are on the rise, especially as we move into the busy spring and summer buying periods, but it has a lot of buyers wondering, Where have all the homes for sale gone? Here’s a snapshot of what is driving current inventory shortages.
- Reluctant Sellers: The housing recovery certainly has legs under it, but close to 22% of homeowners in the U.S. still owe more than their home is worth. As such, these homeowners are waiting for values to rebound before they put their homes up for sale.
- Underwater Home Owners: During the downturn in the economy and the recession, a lot of owners lost a tremendous amount of equity in their homes. For them, it just doesn’t make sense to sell right now, and they’re waiting for the value of their home to come back up so they can afford a down payment on a home that’s bigger.
- Cash Investors: For months, investors have been pestering buyers by showing up with fistfuls of cash and swooping homes right out from under them. Most buyers rely on traditional financing to purchase a home, and they’re having a hard time competing with all-cash investors. These same investors are purchasing homes and then converting them into rentals because that market is performing so well, taking even more homes off the market for purchase.
- Foreclosure Slow-Down: Foreclosed homes dominated the landscape for years, but now banks are focused more on short sales and loan modifications. It’s better for them to strike deals with homeowners this way instead of foreclosing, but interested buyers are left without a lot of options.
- Construction Drought: After the housing market fell apart, home builders pulled back on construction dramatically. In fact, between 2009 and 2011, housing starts were at record lows, and fewer new homes has contributed to the lack of inventory.