Homeowners Don’t Sell as Inventory Declines
ORLANDO, Fla. – A study released by realtor.com finds that low mortgage rates have made it cheaper to buy a home – but only if you can find the right property, which remains challenging. A separate study by Redfin found that one of the reasons for a tight inventory is that current homeowners are living in their homes an average of five years longer than they once did.
“Owning a home continues to be a priority for buyers as we head into the cooler months of the year,” says George Ratiu, realtor.com’s senior economist. “Driven by the tailwind of sub-4% mortgage rates, the steady demand for housing is drying marketing inventory at an accelerating pace. With dwindling supply, prices maintain their upward pressure, [exacerbating] affordability challenges for first-time buyers.”
Inventory nationwide fell by 6.9% year over year in October, realtor.com says. That equates to a loss of 98,000 listings compared to a year ago. Meanwhile, the median list price was $312,000 – a 4.3% annual increase.
In a separate study, Redfin attempted to gauge the average length of time homeowners currently stay in their homes, and median home tenure increased in all 55 metros analyzed, leading to decreased inventory for first-time homebuyers in many places.
In places like Salt Lake City, Houston, Fort Worth, San Antonio and Dallas, homeowners remained in their homes for more than 20 years on average. “It’s hard to justify selling when there aren’t many, if any, affordable options,” says Dallas Redfin agent Christopher Dillard.
The study outlined a few reasons homeowners aren’t selling:
- Taxes: Many local governments reduce property tax burdens for senior citizens, which have made it more affordable for older people to stay in their homes longer. In Texas, where homeowners tend to stay put the longest, homeowners over the age of 65 have the option to defer property taxes until the home is sold.
- Aging in place: Homeowners age 67 to 85 remain homeowners longer, causing a shortage of 1.6 million homes, according to a report by Freddie Mac. That means there are fewer affordable homes for sale for first-time homebuyers, making a market more competitive.
- Convenience: Homeowners who already have walkable access to amenities like schools, parks and shops are more likely to stay put.
In addition, some homeowners have ultra-low mortgage rates thanks to a purchase or refinance during the recession. For some of these people, a move even to a smaller home could end up costing more if current rates are a percentage point or two higher.
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