North Shore Views
Probably not. One month of data does not a trend make. Lower sales activity could have to do with the fact that we had a colder January this year than last, keeping some potential buyers indoors.
But more likely it is because there are so few homes for sale. The months supply of homes for sale is at its lowest point in more than three years and good houses are selling quickly, often with multiple offers. Would-be home buyers are scratching their heads in confusion. Wasn’t this supposed to be a buyer’s market?
Not any more. A recent article in the Wall Street Journal explained why willing and able home buyers are walking away empty-handed and frustrated because they can’t find a home to buy. In a nutshell, here’s what’s going on:
1. A lot of homeowners who bought between 2002 and 2008 are underwater on their mortgages. For all intents and purposes they are trapped in their homes until prices rise above what they owe on their mortgage.
2. Even those who are not underwater have lost significant equity on their homes with the decline in prices. That equity is what would have enabled them to put a down payment on a bigger house. They, too, are stuck until prices rise.
3. No one wants to sell at the bottom of the market. Homeowners have long memories about what their houses were once worth, and they hold out the hope that prices will approach those levels sometime soon. Until then, they are staying put.
4. The rental market has been flooded with all those previous homeowners who have been through a short sale or foreclosure and this has driven rents up. As rents have risen, investors have flocked back into the market. This time around they are not flipping properties for a quick profit, but rather buying and holding them as rental properties, further reducing the number of homes for sale.
5. Builders are building fewer homes these days. Many builders were forced out of the market during the bust. Those that stayed have become more cautious. On the North Shore more builders are sticking to building custom homes where they already have a guaranteed buyer, and there are many fewer spec homes going up.
In the long run the lack of inventory will cause prices to rise again as normal supply and demand dynamics return, which is good news for sellers. Buyers will need to adjust their expectations about the market. The days of getting a steal on a new home are probably over, as are the days of taking your time to consider the choices. Buyers will need to be ready to act quickly and decisively to get the home they want.
If you are interested in buying a home on the North Shore, the Come Home North Shore team can help you! We have an extensive list of homes that are not in the MLS. We can also provide guidance on offer and negotiation strategies that will help you secure the house you want, even in multiple offer situations. Give us a call at 847-881-6657 to schedule a buyer consultation with Anne and Paula, or send us an email.