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By G. Steven Bray
Survey after survey recently has shown that homeowners think it’s a good time to sell their homes. Recently, we reported an all-time high, 65% of respondents, ascribed to that sentiment in a Fannie Mae survey. A recent ValuedInsured survey said the percentage is 79%. So, if it’s such a good time to sell, why aren’t more homes for sale?
Pundits have speculated about many reasons, but one of the top suggestions has been the interest rate effect. Most homeowners have been able to finance or refinance their homes at very low interest rates. Now that rates are higher, they don’t want to trade in that low mortgage payment for a higher one.
This may be a valid concern for some folks, but in the ValueInsured survey, only 18% of respondents cited it. The overwhelming majority, 79%, said they weren’t selling because of the price they’d end up paying for a new home. In the same survey, 61% of respondents said they’re waiting for home prices to become more “reasonable” before moving.
I can see why homeowners would be nervous given reports of bidding wars and nearly double-digit yearly price increases in some markets. Unfortunately, when everyone feels nervous at the same time, it exacerbates the home inventory shortage, which leads to more price increases and more bidding wars.
This “time the market” argument seems like a serious hurdle to seeing more homes for sale. However, I suspect just a moderation of home price increases could calm nerves a bit. If homeowners could predict the price of their replacement homes, we could see an easing of the shortage.