A recent article by Redfin asks “Why aren’t there more homes for sale?”. Answer: Over half of current homeowners are not in a financial position to sell.
The Bay Area and San Jose markets lead the pack in lowest percentage of existing homes currently for sale. That percentage hovers at 30%, the lowest represented area in the study, followed by Seattle and Denver at 54%. This is due largely in part that many homeowners in these areas have a low mortgage rate and good equity in their home.
In this study there are four categories of homes that are unlikely to reach the marketplace anytime soon (percentage of homes affected indicated in parentheses):
1. Low equity (19%) – A home with low equity is one for which the homeowner owes more than 80% of the value of the home. Most of these low equity homes were purchased or refinanced during the home price bubble between 2004 and 2009.
2. Low mortgage rate (16%) – Homes purchased or refinanced when national mortgage interest rates were lower than 4.25 percent are considered to have low mortgage interest rates. These purchases and refinances occurred between 2011 and 2013.
3. Company or investor owned (3%) – These are homes currently owned by a company or investor who purchased five or more homes in a metro area during the past 10 years.
4. Purchased or refinanced in the past seven years (14%) – The home has been owned by the current owner for less than seven years. Redfin has found that buyers typically sell after more than seven years.
Combining these factors, more than half of all existing homes are unlikely to be put up for sale without significant changes in the housing market.
For those wanting to gain deeper insight into how these situations unfolded over time and get more detailed information on where this may take us in 2014 find the full article here: https://bit.ly/SejstA