Lamacchia Realty on Why Housing Inventory is Low
Watch John and Anthony Discuss Why Inventory Levels are So Low
Related blog: 4 Biggest Reasons Housing Inventory is So Low
Spring is the peak season for real estate and if you’ve started your research, you may have noticed some home inventory is low to learn the four reasons why that is, we bring in our real estate experts John and Anthony from Lamacchia Realty and if rumors are true just to clear it up you guys did bring your own makeup artist this morning
Because we’re filming some ads right after this just to clarify that
That’s only him, this is natural
We’ll get to the four reasons here in just a minute this has become a huge issue because there’s a shift not only in the state but nationwide in the real estate market is really to root of so many issues that we’ve had over the last couple of years with our economy but I want o start with home sales declining in February 5% what happened there?
Not surprising. I’m actually surprised it took that long. The reason I say that is because the inventory has been going down for about 14 months so it was only a matter of time that when the product in this case houses decreases to a point that there aren’t enough out there for people to buy you’re going to see total sales go down it finally happened in February it’s not a bad sign for the market though.
It shouldn’t continue we should see a flattening out hopefully in the next couple of months
Spring obviously a big time for both buyers and sellers let’s talk about the 4 reasons why this inventory seems very low a lot of people out there the regular person going to buy that just can’t’ find the right value in the home they’re looking for and there’s a couple of issues with that but number one you have homeowners waiting on the value of their home to go up before they sell
That’s right and you see that in any market where you see appreciation folks who bought at a certain time or have a set number in their head where they have to get say $500,000 they want to wait. And they say ok let the market continue or I don’t want to lose money because they invested a certain amount they added an addition, and whatever it might be and that’s definitely causing sellers who could absolutely sell for top dollar not to put their home out we don’t agree with that decision but we’re seeing that as a common issue.
I just want to clarify why we don’t agree people are also buying a new home so sometimes we have to remind hey listen if you can get $450,000 but in 2 years you can get $500,000, wherever you buy you’re going to pay more as well so in the end it evens out.
And another reason why and a lot of people have found themselves in this position really if they’ve bought at the wrong time over the last couple of years they’re underwater.
There’s still a large, not a large, I’d say the percentage of people who are underwater it’s undoubtedly going down, without any question but there still are people who are either underwater or for example they owe $280,000 on their house and their house is worth $300,000, so if they sold they wouldn’t get any money so those people are holding off putting their homes on the market as well.
Because they need some of that equity for a down payment so if the numbers are too tight, say within 5%, even 10%, they may not have enough equity to make the move.
And a third reason you have if someone who is selling and might want to buy first, they’re waiting for another home to move into they don’t want to get stuck having to rent for a couple of months
Yeah and that’s something that’s happening all the time. I even have personal friends that are going through it right now they want to put their property on the market but they’re hesitating and say well I’m not seeing anything I want so now it’s a vicious circle, we have sellers hesitating to go on because they’re looking for new properties and it just makes the inventory go down.
You have to have a plan B, Plan A is you sell and then you find something, but if you can’t do that once again, renting is not a bad 4 letter word to rent for a period of time is ok, even if it’s extended stay, furnished housing, you have your stuff in storage, not ideal but right now it’s such a great time to sell, that you want to sell for top dollar, and you will find the right opportunity.
And investors are coming in now and picking up a lot of the homes, you see a lot of foreclosures and short sales that are down, as opposed to years past maybe an investor coming in to flip the house financing through a bank, there’s a lot of investors paying cash right now and someone who may not have that cash to pay for the home it’s tough for them to compete with that.
It is, first time buyers are getting frustrated because they can’t compete with an investor who goes to a bank and says hey I’ll pay cash and I’ll close in 2 weeks versus the first time home buyer that’s got to close in 6 weeks and get a loan. So that has an impact. Short sales and foreclosures as a whole are down 40% from this time last year. Last year there were 5000 foreclosures and short sales on the market, now there’s 3000. So this is the medicine the market needs to improve, but it is frustrating if you’re a buyer and people are going to have to put up with it for a while, building permits are up so more stuff is going to be coming on the market as new construction goes up the market gets better and people who will list their homes.
As I mentioned it’s not just here in Massachusetts it’s nationwide kind of a shift that’s taken place. John and Anthony as always we appreciate you coming in, we will see you at the Zip Trips.
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