Interest rates are low, prices haven’t returned to their “pre-crisis” highs, and more people are said to be working. Here in Texas, we know that to be true, as more and more people are moving in to snap up the available jobs.
So why are home sales down almost universally across the nation?
According to Core Logic’s Mark Fleming, the reason is that people simply can’t find a home they want to buy. Inventory levels are at all-time lows.
One reason for this could be the rising interest rates. Yes, they are still historically low – but they’re higher than they were, and consumers became accustomed to thinking interest rates “should” be under 4%.
Now, homeowners who would like to sell, and who would sell under ordinary circumstances, are staying put. Why? Because their current mortgage is below today’s market rates. They don’t want to sell and buy a new home at a higher interest rate.
Mark Fleming of Core logic estimated that approximately half of the 50 million mortgaged homes in the U.S. are financed at rates below the current market. Based on a study of sales trends over the years, he believes that 3.57 million of those homeowners are ready to sell, but holding off due to rising interest rates. Their homes are being dubbed the new “shadow inventory,” as opposed to those homes that are delinquent and almost surely destined to become for sale as Bank REO’s.
If that number was added to the 2 million homes currently offered for sale, buyers might have an easier time finding a home.
Given time, consumers will begin to accept the slightly higher interest rates. After all, people did continue selling and buying homes back in the 80’s – when rates were 10% or more higher than they are today.
True shadow inventory could come to the rescue.
AS of January 2014 there were an estimated 1.7 million homes in the shadow inventory. This is defined as homes with mortgages that are 90 or more days delinquent or that are in some stage of foreclosure. This is down from 3 million four years ago.
When and if these homes come into the market, pressure will ease.
But then there’s one more problem…
It seems that even as inventory shrinks, buyers are becoming more choosey. They are rejecting homes that suffer from “housing obsolescence.” These are properties that are no longer desirable because either the home or the location doesn’t offer the features and amenities that today’s buyers want.
This situation is now being labeled “shadow demand” because the buyers are out there in the shadows, waiting and looking. When the right home comes along, they’ll buy.
Meanwhile, due to buyer rejection of some inventory, levels are apparently even lower than they seem.
When you find your home – the time to move on it is immediately.
So don’t wait. Get pre-approved now, so yours will be the winning offer.
Today’s interest rates are still low, and as always – so are the fees at Homewood Mortgage.
Call the Mike Clover Group today at 1-800-2232-7409 or apply on line at http://www.mikeclover.com.