Home buyers are not the only ones celebrating the uptick in the housing market. Sellers have benefited from the plunging mortgage rates, plus the low supply of competing properties on the market. This is under the assumption, families have equity in their property. Those homeowners with no equity and not able to sell, have created a diminished number of properties available. The limited inventory has had a huge effect on the housing market throughout the United States.
The housing market is no longer characterized by falling prices and weak demand, the market is now handicapped by a restricted supply of homes for sale as demand improves. That has led to multiple offers in most markets and rising prices, due to demand outweighing supply. Nationally, 30% of homeowners have no equity and are underwater. In traditional times, those owners would be selling and moving to other homes. Since they have negative equity, most have decided to sit tight with hopes of retrieving that lost equity.
The other dilemma that has compelled many families with equity to not sell and buy, is they simply can’t find a replacement property. Those sellers turned buyers are less inclined to sell when the chances of finding a substitute home are so limited. It’s not just a coincidence that supply is shortest in markets where more homeowners are underwater. The nation has a 6.6 month supply of homes for sale in May. That is considered a sign of stability. Many of the major markets like Sacramento that have an extremely tight supply of properties are experiencing a buying frenzy. Most of these homes are bank owned and short sales.
As home prices continue to move up, owners and builders will join the fray, which will increase the inventory and have a leveling effect on housing prices. Along with an improved economy comes the inevitable rise in mortgage rates. Just a slight increase in rates can add thousands of dollars over the life of the loan. The quandary for most homeowners now, should they take advantage of mortgage rates and buy now or wait and assume that the higher price for their home will make up for the increase in rates they will pay to purchase another home. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities, including pre foreclosures.