An article published on March 20, 2017 by David Arbit gives the following reasons for the current low inventory conditions currently existing in Real Estate;
1) Lack of confidence Sellers have in being able to secure their next property in a highly competitive environment.
2) Sellers are enjoying the current price increases for now, especially since some homes were underwater at one time.
3) Sellers still think prices are low or still believe their home is currently underwater, which is mostly incorrect as recent CoreLogic statistics claim less than 6% of mortgages are underwater.
4) Builders are developing more apartments than single family homes instead of condos, for now, although there is some evidence this trend may have peaked generally, but in high demand areas building is still occurring. Note also that current apartment builds are often built with the ability to turn those apartments into condos should the trend reverse.
5) New construction is not sufficient to fuel inventory in this market.
6) Would-be sellers believe it is cheaper to rent than to own, which is true in San Francisco or Manhattan but untrue in Minnesota.
7) Stricter mortgage qualifications and some lingering liquidity issues are present, however, there are now many options for those who need the additional help to get into their first home and I have several lenders that help first time buyers overcome credit and purchase issues wonderfully.
8) There is still a perception by some buyers that you need 20% down to get into a home, but the truth is there are many programs that allow buyers to get in for far less and it is really getting easier for buyers to make home-ownership a reality.
9) Sellers are staying out of the market to avoid the cost of selling. Since the Seller negotiates the commission with the selling agent, and, often pays some or all of Buyers closing costs, this is a consideration unless the Seller stands to make a good profit from their sale.
10) Sellers are staying in their homes and renovating rather than selling more these days.
11) International buyers and investors are absorbing some inventory, rental conversions are happening around highly desired rental areas such as the University of Minnesota campuses, Uptown, Northeast and the more popular neighborhoods with great walkabililty scores.
12) Fear of making a major change due to economic or political uncertainty.
13) Seniors are deciding more and more to stay in their homes and “age in place” making modifications allowing them to remain at home longer.
So, the road to finding a new home at this time requires strategies to become the accepted offer in a multiple offer situation, and other strategies that will temp a seller to accept. Sellers are not always just motivated solely by cash, there are often some other considerations and Exclusive Buyers Agents ferret out those other motivation factors as often as possible.
Call me today with any questions, 612-366-6363.