Low inventory levels in homes and condos listed for sale have been wreaking havoc on sales numbers and median sales prices for months. As buyers in search of their next homes scour through nearly a thousand fewer active listings than were available last year, many are asking the question..."Why is it like this? Where did all the homes go?"
There are multiple reasons for the inventory shortage in the greater Daytona Beach area and across the state of Florida.
One cause is simply a sign of economic recovery. Fewer people are behind on their mortgage payments.
Black Knight Financial Services told Mortgage News Daily that people who have fallen behind on their home payments are twice as likely to list their home for sale than someone who is current on the payments. And now, as unemployment creeps back to normal levels and the results of tighter lending standards begin to become more visible, there just are fewer people falling behind.
Of course, the status of someone's mortgage isn't the only reason people sell.
Some other things that Inman News says could be playing a part in the low inventory levels include:
Longtime low interest rates. Interest rates have been ridiculously low for a long time now. Given that ongoing cheap lending environment, many homeowners and investors here, there and everywhere have either purchased a home or have refinancied theirs to lock in the low rates. As we now face the likelihood of higher interest rates on the horizon, it's becoming more and more unlikely that those homeowners will be selling anytime soon. They would be risking giving up their great financing!
Worst. Recession. Ever. So, yeah. We all remember that. And we know very well that in places like Florida, the recession did more than depress home values. It was like hitting a "reset" button in many areas of Volusia and Flagler counties. Home values around here fell so hard, that in some cases homes ended up being worth half what they were during the peak of the bubble. In fact, many home values in our area dropped to levels LOWER than they were before the market began to bubble and values started rising. Tons of homes were foreclosed on. Tons more homeowners lost their jobs or needed to relocate and had to sell while their home values were rock bottom. And savvy buyers with access to extra cash or good lending picked up some great deals and bought homes and condos at a steal of a deal because of it. Consider the low interest rates with the cheap prices they paid for those homes, and there's a good chance that many of those folks may not yet be ready to let go of the great deal they got themselves. Meanwhile, some investors bought up entire blocks and neighborhoods with plans of building big things. (For example, an investor bought up a block's worth of homes along Saxon Boulevard in Deltona, which were recently razed to make room for a new RaceTrac gas station.) Now consider that for every buyer who's hanging on to the great deal they got, there's a home or condo that's NOT for sale now. And for every investor who's doing something else with the properties they picked up, there are still more properties NOT for sale today.
Still catching up. It's likely that you know someone who bought their home or condo at the height of the real estate boom. They paid way too much for the place, and though it was extremely difficult, they managed to hang on to it through the downturn. And while the recession is over for the most part, Florida's home values in many neighborhoods are still hovering just below the peak of the boom. So that person, still cannot sell their home without taking a loss on the property. Therefore, it's not listed and it's another home buyers won't be considering this summer as they search for properties.
Rising values. So, home and condo values have been on an upward trajectory for a few years now. And just like every other time we experience some longterm growth in the market, memories of past downturns begin to fade. Right now, there are a lot of homeowners and sellers out there who believe home values will continue to rise. Just like an investor who hangs on to stock because they believe values are headed upward, so will homeowners hang on to their homes if they think a little wait could net them more cash at the closing table. Whether it's true or not, right or wrong, it's keeping some homes off the market that might otherwise be listed for sale and its fueling the fire of low inventory levels. (Unfortunately these homeowners are also likely to play a role in fueling FALLING home values and adding to high inventory levels when they panic and try to sell - or are forced to sell for economic reasons- when the market shifts downward again.)