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The number of existing homes for sale has continued to decline over the past few years. Simply put, this means there aren’t enough homes on the market for those who wish to buy.
That’s good for some existing homeowners as it increases their home’s value, but it also makes it difficult for them to find another home, if they sell.
According to NAR’s recent Quarterly Housing Opportunities and Market Experience (HOME) (you gotta love these acronyms) report, more than 70% of current homeowners think now is a good time to sell. If they would follow through that would put more homes on the market, better balancing supply with demand. That would help stabilize rising home prices. So, why aren’t they selling? Read on…
The same report reveals that about 80% of homeowners think now is a good time buy. So if more owners considered buying, they would put their home on the market which might spur more people to shop for and buy homes.
With rents rising factored into the process, are those now renting interested in entering the market as first-time or return homeowners? This increases demand, which increases home prices, making it more difficult for these same people to afford a home.
It’s a vicious cycle. According to NAR Chief Economists, Lawrence Yun, current homeowners are not selling because there are either content where they are, waiting to build more equity, or afraid they won’t find a reasonably priced home if they sell.
So, we continue to see more demand than supply, increasing home prices, and a reduction in available affordable housing.
Something’s got to give. If the economy continues to improve, rates will increase making home purchases a little more costly.
That could have the effect of reducing home sale prices attracting some buyers back into the market.
That could result in those homeowners, who are now sitting on the sidelines, deciding to test the waters and put their homes up for sale.
Maybe it will get the ball rolling to bring more sellers and buyers to the table. The housing market would have a better balance of supply and demand, stabilized home values, and could bring the dream of homeownership within the reach of more consumers.
It all hinges on the economy, jobs, and wage growth. Now, where have heard that before?
Editor’s Note: A Mexican standoff is a confrontation between two or more parties in which no participant can proceed or retreat without being exposed to danger. As a result, all participants need to maintain the strategic tension, which remains unresolved until some outside event makes it possible to resolve it.
No blog tomorrow as we all celebrate the 4th of July holiday.
