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The most recent Zillow Housing Confidence Index (Where do all these reports come from?) indicates that although many homeowners think now may be a good time to sell their home, they do not believe it is a good time to buy. (Housing Index)
That creates a little problem. If existing home owners won’t sell, or buy, and builders aren’t building new affordable units, then how will the housing market continue to improve? Home values, which have been increasing, will only continue to increase based on supply and demand and continued sales.
Fewer homes being put on the market would normally have the effect of raising prices as long as there are buyers. However, with fewer consumers thinking that now is not a good time to buy, values may start to decline. That may help some first time buyers but it will also adversely affect exiting homeowner’s equity position. In turn, that may make them more hesitant to sell. Not a good scenario.
Some say there are waiting for their values to increase so they will realize a bigger profit when they sell. This will give them more money to put down on a new home.
Although their home may increase in the value, the home they may end up purchasing is also increasing in value at the same rate. The effect being that the new home will cost them more than the amount that they realized in the additional equity. By waiting they may be expanding the difference in what they’ll get for their home versus what they’ll pay for the new one.
A home should not be merely looked as an investment. Obviously, no one wants to lose money in the deal. But, a home is a place to set down roots and raise a family or a place one can relax and retire. It is your place to live. If someone owns a home, has equity and can afford a move up to a home they desire, then they should go for it now. Why wait?
If values continue to improve, they’ll realize the equity build up in the new home. If not, they’ll be living in a nicer home that they wanted and know they can afford. Everything else will fall into place.
It’s time for lenders and Realtors to educate consumers on the values of owning a home and in making the right moves at the right time. Waiting on the sidelines is not necessarily a good thing. Sometimes it’s better to get into the game and make things happen rather than wait. In the long run that may turn out to be the winning play.
