This is the 4th in a series of blogs about the shrinking inventory of homes for sale
Continuing the discussion… Low Inventory Woes: Why More Sellers Aren’t Selling. This is the 4th installment in a series trying to pinpoint the reasons for the historic low inventory of homes the market has experienced for more than four years. A condition not likely to change anytime soon, as we plunge headfirst back into the rest of the 2017 selling season.
The short list of causes we’ve invoked: 1) Slow growth – few new homes being built 2) Big demographic shifts – the aging population 3) Tight rental market affecting a tight purchase market. 4) Increased mortgage regulations/Changing perceptions of debt.
We spent a lot of time last week talking about Move-Up Buyers. And how our market and our inventory has been dependent on them for the last 30 years. While they’ve pushed the market forward along with their arc of acquisitions – buying and selling a series of homes at semi-regular intervals – as a function of the natural transitions they were going through in their lives: young singles, marriage, growing careers, job promotions, commute distances, kids, schools etc.
First time buyers would squeeze into the market, wait five years and then buy their next homes, then wait five years and buy their next homes etc. Each time, moving up in size, value and location. At each transition, they’d sell a home and buy a home more or less concurrently. There were always enough move-up buyers in the market to churn the inventory and free-up lower priced homes for other move-up people following in their footsteps.
When it comes to people and their homes, moves are almost always about big life transitions. Folks don’t pick up and change their place of residence just for the heck of it. Homes are our bastions of safety, comfort, refuge, privacy and selling them is about huge, big, transformative change. Why do people choose to take on that much change? Because something is going on in their lives that makes it necessary.
So what happens when more of the people who moved up and up over the years and finally found their dream homes, suddenly begin to realize that their current dream home may not work very well for the years to come? I’m talking about a broad swathe of folks between 55 and 75 years old (and some older) who have been here for a long time, own great houses, but are trying to come to grips with the inevitable realities of their aging processes.
That includes people thinking about the need for a single level home, because their knees hurt and they don’t know how long they can do stairs. Others who have recently become empty nesters. Their kids have graduated and they are out of the house. They don’t need or want that much space anymore – for lots of reasons.
Still others don’t like the idea of heading into retirement with a mortgage. They want to live somewhere free and clear with no debt hanging over their heads. And of course, there are others who own their homes outright, but find themselves “house rich and cash poor.” They need to recapture some of the equity that’s trapped in their houses to live off of.
So we come to a whole generation (or two) of former move-up buyers that suddenly finds itself fantasizing about becoming move-down buyers in a market that doesn’t easily accommodate that kind of change.
Next Week: The challenges of move-down buying