Why we’re suffering from low inventory
We have another great article from Gino Blefari, the Founder and President of
Intero Real Estate. This one is entitled, Low Equity Holds Back Housing
Inventory and Sales and speaks to the struggle we’ve been writing about and
Buyers here in the Silicon Valley have been dealing with for months: little to
no inventory. There’s been plenty of speculation about why this is-now we have a
report that sheds more light on a potential Sellers situation. If you’re
thinking about selling your house, or know that you want to but don’t think you
can, reach out to The Dawn Thomas Team today.
“22 million homeowners can’t sell.
That’s what’s really holding back inventory and therefore home sales in many markets right now. While home sales have rebound at a healthy pace in many areas, lack of inventory holds a wrench in the gears.
Zillow this past week reported that 13 million homeowners were still underwater in Q1, and more than 9 million more lacked enough equity to move. That’s 25.4% of all homeowners with a mortgage. This is a large part of the short inventory story.
These homeowners are essentially stuck. For now.
The total number of homeowners with less than 20% equity increases the negative equity rate to 43.6%, or 22.3 million homeowners, Zillow said. Zillow’s factoring in that a seller would need at least 20% to cover selling and closing fees, as well as make a down payment on a new home.
Of the 30 largest metro areas in Zillow’s report, Las Vegas (71.5%) had the highest percent of homeowners with less than 20% equity. Atlanta (64.1%) and Riverside, Calif. (59.7%) were second and third.
What’s going to bring back equity? Time and demand. But it needs to happen within delicate boundaries. If inventory continues to lag by larger margins, demand will price out too many buyers – especially first-time buyers.
As we’ve noted before, this is the only notable obstacle in the recovery right now. As it stands, housing is being called the strongest sector of the economy. Home prices are making healthy gains and sales are either chugging along in some markets or exploding off the charts in others like we’re seeing in Silicon Valley.
What needs to happen to remove this obstacle, however, is a combination of things. Values will need to continue to climb, but more of the severe underwater cases will also need opportunities to either refinance or short sell out of their situations.
It may seem like a steep climb, but we’re already on the hill looking up. Soon we’ll be looking back. Most expect more improvement on the horizon.”
“22 million homeowners can’t sell.
That’s what’s really holding back inventory and therefore home sales in many markets right now. While home sales have rebound at a healthy pace in many areas, lack of inventory holds a wrench in the gears.
Zillow this past week reported that 13 million homeowners were still underwater in Q1, and more than 9 million more lacked enough equity to move. That’s 25.4% of all homeowners with a mortgage. This is a large part of the short inventory story.
These homeowners are essentially stuck. For now.
The total number of homeowners with less than 20% equity increases the negative equity rate to 43.6%, or 22.3 million homeowners, Zillow said. Zillow’s factoring in that a seller would need at least 20% to cover selling and closing fees, as well as make a down payment on a new home.
Of the 30 largest metro areas in Zillow’s report, Las Vegas (71.5%) had the highest percent of homeowners with less than 20% equity. Atlanta (64.1%) and Riverside, Calif. (59.7%) were second and third.
What’s going to bring back equity? Time and demand. But it needs to happen within delicate boundaries. If inventory continues to lag by larger margins, demand will price out too many buyers – especially first-time buyers.
As we’ve noted before, this is the only notable obstacle in the recovery right now. As it stands, housing is being called the strongest sector of the economy. Home prices are making healthy gains and sales are either chugging along in some markets or exploding off the charts in others like we’re seeing in Silicon Valley.
What needs to happen to remove this obstacle, however, is a combination of things. Values will need to continue to climb, but more of the severe underwater cases will also need opportunities to either refinance or short sell out of their situations.
It may seem like a steep climb, but we’re already on the hill looking up. Soon we’ll be looking back. Most expect more improvement on the horizon.”
This blog is courtesy of The Dawn Thomas Team who is an
award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos
650-701-7822. We help nice people with selling and buying homes from Palo Alto
to West San Jose!
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