Housing Inventory Critically Low
Last month, the National Association of Realtors (NAR) reported that housing inventory was down 4.7% from the same time last year and that the month’s inventory of homes for sale stood at 4.8 – far below the six months necessary for a normal housing market. In Long Beach, Lakewood, and many other Southern California communities, the inventory is even lower — below two months in some neighborhoods.
Why is there such a shortage of inventory?
The recently released Homeowner Sentiment Survey suggests that the American homeowner may not be fully aware of the opportunities that exist in the current real estate market. The survey, conducted by Edelman Berland for HSF Affiliates, also reports that many homeowners would be placing their home up for sale if they were better informed about today’s market.
Since the housing industry is facing a shortage of housing inventory, the survey’s findings are crucially important.
The survey reported that 23% of current homeowners questioned are considering selling their home, but haven’t yet put it up for sale. That’s almost one out of every four houses. These would-be sellers possess the inventory necessary to normalize the balance between “supply & demand” in the current market.
Why are potential sellers hesitating?
The survey shows that 55% of the 23% contemplating selling “would be more likely to put their homes on the market if given more information about the process”. What information do they need?
Here are a few of the challenges that potential sellers perceive to exist according to the survey along with what is actually happening in today’s market:
1. More than half (53%) don’t realize that “the number of homes for sale on the market is lower, giving buyers fewer choices”. As a matter of fact, only 6% of potential sellers believe that listing inventory has recently decreased.
In reality, as we mentioned before, inventory is down from last year. Most communities in Los Angeles and Orange Counties are experiencing housing inventory that’s significantly lower than this same time last year.
2. 80% think credit scores make it difficult to get a loan.
For sellers who are contemplating buying a replacement home, this can be a perceived hurdle to making a move. Studies have shown that many Americans believe that you need a credit score of at least 780 to get a loan when the actual median scores on closed loans are demonstratively lower than that.
3. 76% believe stricter lending requirements make it more difficult to get a mortgage.
In reality, the Mortgage Credit Availability Index shows lending standards have been consistently easing over the last year.
4. 68% think that current homeowners are trapped into their mortgages with insufficient equity to sell their current homes.
In reality, a recent Fannie Mae study revealed that 32% of Americans are dramatically underestimating the current equity in their homes. Certainly there are people who over-estimate the value of their current homes, but many homeowners can afford to make the move they desire.
What’s the answer?
Every family should feel confident when they are buying or selling a home. In order to feel confident they need to truly understand their options and opportunities. Education and information are essential for homeowners to best understand their options and determine their current position and options.
If you’d like to find out what your home is currently worth, simply fill out the form below and we’ll be happy to contact you with that information.