You’ve seen the articles. Trulia, The Wall Street Journal, Philly.com and everyone else is reporting that housing inventory numbers dropped 21.6% over the previous year, according the National Association of REALTORS®. It is true locally, too and buyers are getting more frustrated.
Here are the key factors in all of this:
• While it’s true those who waited out the down turn in the market may have built up some equity again, many Sellers are still struggling with owing more on their homes that the current market values. Prices are adjusting higher, but maybe not as high as they need. Sellers are holding out, particularly if they don’t have enough equity built up to move up.
• Investors remain strong. However, instead of buying, rehabbing and flipping, investors are holding on to properties as rentals. More rentals = less available purchase properties.
• Foreclosures are down significantly. Banks are more willing to modify loans and accept short sale offers.
• Builders are trying to recover from record low starts. Currently, there is a slight up-tick in new home construction.
These factors have created a sense of urgency among Buyers. It is no surprise that with less housing inventory, the choices available have become more desirable. Buyers are seeing their first and second choice homes go to contract before they can even firmly decide to make an offer. That competition is very real, often resulting in multiple offers on properties. What a home is worth is simply what a Buyer is willing to pay for it. If a Buyer is willing to pay above your offer or even the Seller’s asking price, then that is what that home is worth and it will move quickly out of the inventory.
Educate yourself on local neighborhood and market conditions. Be ready, financially, to take advantage of still historically low interest rates. And call me to discuss how to make your dream home a reality.
Source: The Wall Street Journal (Jan. 22, 2013) Six Reasons Housing Inventory Keeps Declining