Despite the Need for Listings, Sellers Hesitate
We keep reading about the widespread shortfall in U.S. home listings — usually credited for the steady rise in prices. For the typical homeowner inclined to sell anyway, you’d think those conditions are reason enough to put their home on the market.
It seems unlikely. However, there is a shortage of sellers willing to put their homes on the market, yet the latest U.S. data indicates strong sales activity. For the year just ended, existing-home sales reached 5,640,000. According to the Trading Economics website, that volume constitutes the highest level since 2006. Despite the shortage of listings, the market is moving briskly.
What’s the Cause?
There are reasons why that might make sense. The allure of being able to sell quickly and for a premium—conditions primed to create a lively market—is up against at least one overriding real-world barrier: the fear existing homeowners have of not being able to find something better at a doable price. The COVID-19 wildcard may have added an outside hassle factor, but at this juncture, practical workarounds have successfully dealt with the health issues raised by the pandemic. The only other reason homeowners might decide to hold onto their house despite reasons to move on is financial: the temptation to simply refinance at today’s remarkable rates.
How Long Will it Last?
Looking to the future, some industry analysts expect the inventory shortage to continue—but others believe it will begin to reverse. Igor Popov, Chief Economist at online company Apartmentlist, foresees that changing social factors will force more and more residence changes—a real estate version of homeowner musical chairs. He cites the pandemic as a key factor, causing a “generation of knowledge workers to reconsider where they live.” Since remote working is continuing to make office attendance less necessary, in his view, some of the last decade’s hottest residential markets will cede popularity to mid-sized and rural communities.
Money magazine quotes another chief economist, James Gaines of Texas A&M University’s Real Estate Center, who sees refinancing rates as the key motivator reducing peoples’ incentive to list and move. Baby Boomers, a primary homeowner group, have also been tending to “age in place”—contrary to previous expectations.
Ready to Move?
But regardless of national and local trends, the decision to sell a home is primarily prompted by individual life events and aspirations. For homeowners who are inclined to enter the listings for any of the traditional reasons, the current market’s tilt is a fortunate turn of fate. If the time seems right to explore your own options, call your trusted local agent!