Overall, since the recession, buyers have felt that the time was not right to buy a house. They were not confident about their jobs and income, they were having a harder time amassing a down payment and they also didn’t believe the market had yet to hit bottom.
After years of buyers kicking the tires, grumbling about houses on the market and making low-ball offers, sellers have decided that the time is not right to sell and are keeping their properties off the market until conditions improve. A Fannie Mae survey found that only 15 percent of Americans think this is a good time to sell.
In other parts of the country the problem is exacerbated by the fact that so many sellers are underwater or so close to it, that selling is not possible. That is a problem in parts of Massachusetts, but not a pervasive problem in the greater Boston area.
Buyers believe that when the spring market arrives, tons of houses will come on the market. Of course, more will come on as the weather warms up and sellers are trying to time their sales for when their children finish school in June. But the lack of inventory is not due to the time of year. In Newton, where I most list properties, there are currently 92 single family homes on the market. This time last year, there were 154. This has been the situation for several months now.
The shortage is felt most deeply in the under $1M range. Currently there are 36 houses on the market under $1M in Newton. Last year there were 79. This is not because houses are getting more expensive, but because there is a glut of expensive houses on the market.
For Massachusetts the numbers are about 19,000 last year vs 15,000 this year.
This lack of inventory then creates a domino effect as families who need to upsize or downsize cannot find a property to buy in order to put theirs on the market.
I speak from personal experience – I have far more buyers than sellers in my pipeline right now and it is a challenge to find anything decent for those buyers. When we do find something, it more often than not becomes a multi-bid situation. Some of these buyers have houses to sell when they do find a place so those are homes I cannot put on the market now.
The irony is that this is an excellent time to sell, the best time since the tax credit, if not since 2007. First-time buyers finally seem to have figured out they better act now or get left behind. Multiple offers are driving prices above list, especially for lower end properties that are in very good condition.
The market rises and lowers for everyone. If sellers wait to get more for their homes, the house they buy to upsize or downsize goes up as well. Waiting for the market to improve only benefits sellers who are not going to be buying a home to replace the one they sell.
In the short-term – while buyers are starting to panic about not finding a home might just be the best time to sell.