As you know, the housing market has been struggling with inventory for years.
Thanks
to super low interest rates and the Covid-19 Pandemic, we've seen high
buyer demand over the last few years, buying up inventory left and
right. This has resulted in dwindling inventory. And with limited
options to buy, Sellers are hesitant to list their homes for sale, which
is exacerbating the inventory problem.
Here’s what is keeping homeowners in place and why they should re-think about selling.
- Low Inventory: As mentioned above, low inventory has a roundabout effect. Because there are fewer homes to choose from, some homeowners fear entering the market and not having many options. As a result, they stay put, keeping supply low.
Reality Check -- While inventory is still
low, the supply of homes for sale is growing every month. This gives
you more options to choose from. In addition, new construction has been
booming in areas like Erie, Broomfield, Thornton, etc. Added bonus: Low
inventory also means less competition when you list your home for sale!
- Mortgage Rates: It's estimated that about 80% of current homeowners with outstanding mortgages have interest rates below 5%, so selling their home (and financing a new one) would mean trading their low rate for a higher one. Many would rather wait for rates to drop before selling their homes.
Reality Check -- Yes, it may
seem counterintuitive to sell your home if you're sitting on a nice low
rate of 3%. However, many sellers are very motivated and willing to pay
buyers' closing costs, including $$ for a rate buy-down. Also, if you
wait to "time the market" when rates drop, the market will likely be
inundated with other sellers getting off the fence (increasing competition). In addition, the Fed
is expected to drop rates several times later this year, so many of
today's buyers will be refinancing (as we all did back when rates were
in the 3s!)
- Waiting Until Home Prices Crash: Some homeowners don’t want to enter the market simply because of home affordability. Home prices are up, as are homeowners insurance costs and, in many areas, property taxes.
Reality Check --
Home prices are not falling. If anything they have leveled off slightly
when interest rates rose. Once interest rates drop later this summer,
there will be strong buyer demand again, pushing prices back UP. Now is a
great time to make a move before we start seeing crazy bidding wars
again.
- Aging in Place: For older homeowners, aging in place is a more appealing option than finding and getting used to an entirely new property. Many opt to renovate their existing homes for accessibility instead.
Reality Check
-- Many older homeowners are in a house that is way too big for their
needs, and many are still in big 2-story homes where they raised their
families. Depending on how much equity you have, it may be possible to
sell your current home and downsize to something smaller, with lower maintenance and possibly pay CASH for it!
Even though the housing supply is relatively low, it’s still possible to find a place you love. Are you ready to jump into the housing market? Get in touch for expert help finding your next home today.
Sally Heldman
Broker Owner
Metro Brokers / Heldman Real Estate
303.475.4508 CELL
sally@sallyheldman.com