Low
inventories continue to plague housing markets across the country, as buyers
face limited options and more bidding wars. But with home prices rising, more sellers are
slowly starting to put their homes on the market.
However,
more than half of all existing homes are unlikely to be put up for sale anytime
soon, unless there are significant changes to the housing market. Here are the following four categories of
homes that are unlikely to reach the market anytime soon because of their
current financial position:
1. Low equity: Estimated 19 percent
of homes. These are homes where the home owner owe more than 80 percent of the
value on the home. Many of these
low-equity homes were purchased or refinanced during the housing bubble between
2004 and 2009. Why go through the
trouble of selling when most of the proceeds will just go to the lender?
2. Low mortgage rate: Estimated 16 percent
of homes. Homes that were purchased or refinanced when mortgage interest rates
were at record lows aren’t likely to sell anytime soon. I consider low mortgage
interest rates to be below 4.25 percent. These homes were purchased or refinanced
between 2011 and 2013. No point in
selling anytime soon when you have a lower rate than the current market and end
up with a higher rate when you decide to buy again.
3. Purchased or
refinanced in the past seven years: Estimated 14 percent of homes. A home that
has been owned by the current owner for less than seven years isn’t likely to
hit the market soon. Buyers are more
likely to buy a home that has been occupied by the current owner for more than
seven years simply because most owners don’t plan on selling in such a short
time frame.
4. Company or
investor owned:
Estimated 3 percent of homes. These are homes that are owned by a company or
investor who bought five or more homes in a metro area during the past 10
years. These investors are likely holding on to their investment for the
capital appreciation and rental income and will only sell when it is very
advantageous for them.
If you have any questions, feel free to contact James Y. Kuang at (626) 371-5662 or by email -james.kuang@coldwellbanker.com
