Westchester and the surrounding counties are seeing a peculiar phenomenon causing no small amount of consternation to home buyers. There simply aren’t many homes for sale. This is especially the case for homes one might consider in the starter home category; we have buyers who are seeing very little for sale, and what they do find is often gone in a bidding war. The market is healthy; homeowners know this. So why the low inventory?
There simply aren’t many homes for sale. This is especially the case for what one might consider the starter home category; we have buyers who are seeing very little for sale, and what they do find is often gone in a bidding war. The market is healthy; homeowners know this. So why the low inventory?
- Low rates artificially causing “cling.” Consider the empty nest seller who would ordinarily sell, but several years ago refinanced into a historically low rate. Rates are higher and less palatable now. If you are paying under 3.5% and are looking at rates a full point higher (which, in context, are still pretty awesome), you might not be in such a hurry. Sure, mowing the lawn is a pain, but at this rate, you can deal with it for another year or two.
- Equity uncertainty. Simply put, many homeowners don’t realize their home’s value is higher than they might think. We’ve seen quite a bit of this; recently a homeowner we knew was considering a quick sale to an investor. Upon executing a market analysis we projected the market value to be almost $100,000 higher than they thought. We listed the property and now have it under contract at a far higher price than the client expected.
- Lag in consumer knowledge. When the market crashed in 2008-9, it took home sellers a couple of years to truly get that values were down dramatically. Conversely, when the recovery began to gain steam in 2012-13, buyers took some time to adjust to the fact that they couldn’t hold sellers over a barrel anymore.It may take another season of robust activity for sellers to get savvy to the opportunity in front of them today.
Licensees and the industry as a whole need to look in the mirror on this also. When the market originally declined, the mantra of NAR was that now is a great time to buy. That may have been the case, but to the ears of the consumer, it sounded as if we were telling them to run toward a burning building. Why would they feel any differently when we say, quite accurately, that now is a good time to sell?
The fact remains that the buyers are out there in force, the mortgage market is easier than it has been for almost a decade and there is pent up demand. The market is indeed healthy, and I would encourage sellers to strike while that iron is hot.