- Record-high prices stifling wants/needs of first-time, downsizing and relocation buyers to sell or upgrade from their current homes
- Many unwilling to compete in sizzling hot market
Soaring Home Prices and Frenzied Competition Snuffing Out Needs/Wants of Current Homeowners to Sell
Record-high home prices seemingly spiraling out of control and fierce bidding wars are making current homeowners increasing reluctant and/or afraid to sell their existing homes.
Fear of failing to find a new and affordable home is the latest reason that homeowner tenure continues to grow longer and longer. Boomers are opting to age-in-place and/or delay their retirements. Young families wanting to trade up for larger homes are afraid they’ll simply be priced out of their neighborhoods.
According to Thad Wong, co-founder of aproperties, said, “It’s hard to upgrade. Even with low rates and the appreciation of their (existing) home, they can’t find something better than what they live in right now.”
US Housing Inventory Never Tighter
The number of existing homes on the for-sale market at the end of April was down -20.5% y/y during the same time frame.
This supply paucity has and continues to both spur home prices to all-time highs and slow down the pace of sales. The longer this goes on, many economists are projecting that home prices will just keep soaring. Such never-ending price jumps would make homeownership prohibitively expensive for too many potential buyers.
Supply Shortage Most Acute at Lower Price Points
According to NAR, the supply of homes priced between $100,000 and $250,000 dropped more than +30% in April y/y.
On the other side of the ledger, the supply of for-sale homes priced above $500,000 increased y/y.
Homes in Boise ID that sold in 2019 for $235,000 now cost $400,000+. (Just as a reminder, the Boise metro, in Q1 2021, posted the fastest home-price growth in the country, up +28.2% y/y according to the Federal Housing Finance Agency (FHFA).
Timing of Dual Transactions Can Be Iffy
For needing-to-sell sellers, there are no more contingency home offers likely to be accepted. No more being able to buy a different home based upon the sale of an existing home.
Some sellers negotiate rent-back agreements in order to give them more flexibility time-wise in finding a new house.
Some sellers move in with family members or find a short-term rental to hold them over
Meredith Hansen, operating principal with Keller Williams Greater Seattle, said, “Sometimes (these alternatives) backfire, and people end up living with relatives for way longer than they thought they were going to do. I don’t think we can really alleviate the shortage until people feel like they can sell their home and move.
Thanks to The Wall Street Journal.
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