Low Inventory and Seller Empowerment

Lack of supply is a big problem in the market right now, and you know what that means…yep, it’s a sellers market.

“Homes are being built as quickly as possible, yet most are not in the price range where inventory is needed most – the entry-level market,” said Jim Gaines, Ph.D., economist with the Real Estate Center at Texas A&M University.

Texas is among the top states with the tightest housing supply in the nation.

If you’re looking to relocate to Texas you may find it quite difficult to find your ideal home.  According to a new report from the Texas Association of Realtors, housing inventory in the Lone Star state just hit record low.  This tightening of inventory isn’t just in Texas however, buyers across the nation know first hand that sellers are in control.

Sellers Take Charge

There is the current mentality among some homeowners that home values will continue to rise as far as the I can see. Similar to the mentality among many stock investors, their bias towards optimism can lead to them holding onto a stock too long, especially when clear market indicators tell them to SELL.

That said, people believe their properties will increase over time. Regardless of whether or not this statement is true, it is indeed conventional wisdom among the majority of homeowners, but more importantly, potential homesellers.  This mindset has become another factor in the tightening of inventory and the hesitancy shared among many homeowners to sell.

Ok I can sell, but where would I go?

We’ve already taken a look at a few of the potential constraints on the move-up buyer but let’s look a bit further. Lower inventory triggers a downward cycle of even lower inventory.  If one cannot find a new home to move to, they will not list/sell their current home, and so on, and so on…

Move-up buyers aren’t the only ones suffering the effects of low inventory.  Senior citizens and retirees are finding little options in terms of new r retirement communities in their local area, thus they decide to remain in their homes indefinitely.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s