What Does Low Inventory Mean for Potential Home Sellers?
The inventory of homes for sale, the number of homes currently on the market, is the LOWEST it has ever been! Take a look:
Realtor.com also did a report that this is occurring on a NATIONAL level as well!
The inventory shortage is squeezing move-up home buyers. Right now, price instability and the lack of available homes is causing this group to hold off. Owners who may be ready to move into a larger or more expensive home are often considered hidden drivers of the market. Real Estate Economy Watch says that stability is coming, despite the inflationary impact of market shortages, and predicts that this "vicious cycle" will ease.
In the Twin Cities, new home builders are focused on this move up buyer market. This means many things.
- Incoming first time buyers and downsizing buyers will likely see inventory come on the market with each completed new construction home.
- Move up and luxury home sellers are competing with NEW homes. That means they need to have the condition to compete and the bonus features to win. They need to be flexible with showings - after all model homes are always available.
- The coordination of moves for people that are both buying and selling needs to be handled carefully. Builders can't give exact closing dates until close to the end of the build as weather and labor hours affect scheduling. This means the home seller that is building a new home needs to find a buyer for their home that is flexible on the closing date.
Other factors for move up buyers are causing a careful balancing act as well.
Depending on the price range, the buyer that comes to purchase their home may also have a condo or townhouse to sell. This results in something called "stacking transactions" that requires all agents to be on their toes to balance the timing of inspectors, lenders, appraisers, title companies and of course their real estate clients.
As of 2016, nationally, many home owners were still underwater. One of five homeowners with a mortgage doesn’t have enough equity to sell. The Twin Cities is no exception with most homeowners that bought in 2004-2007 still owing too much to sell. This isn't the same situation as we saw during the depths of the housing crisis, but it's still making its mark on inventory levels.
And, the many sellers that can finally break even on their sale don't have large down payments for their next home and often need closing cost assistance. Cash is tight.
What is the good news about the current housing market?
FHA just reduced the mortgage insurance rates! This make FHA mortgages more attractive and more affordable for many buyers. That means there is a lot of demand for entry level to mid-level homes in good condition that meet FHA standards (FHA Loan Appraisal Guidelines)! With more buyers competing for your home, you can choose the buyer that poses the least risk to your purchase transaction.
THIS MEANS NOW IS THE TIME TO LIST YOUR HOME FOR SALE. LOWER INTEREST RATES FOR BUYERS MEANS HIGHER PRICES FOR SELLERS AND MORE SELLERS CAN AFFORD ON THEIR MOVE UP HOME.
Homes are currently averaging only 29-41 days on the market in these areas! That means that if a seller prepares their home for sale in January/February and accepts an offer by March, they can move as early as April/May and beat the rush of the "spring market" competition!
So what is the bottom line for homeowners that want to sell their current home and buy a new home in 2017?
You need an experienced agent that can help you carefully coordinate your move. An agent that understands process, timing, financing and can negotiate the whole process, not just the price.
Need help getting started with your move-up plans? Contact Sarah Marrinan today!
