It really could not be predicted. For years during and after the financial crisis analysts warned that the real estate market would be weighed down by an avalanche of bank-owned properties and short-sales. And these analysts were right, at least for awhile. But quicker than most everyone expected we turned from a buyers' market to a sellers' market in many areas of the country. How can it be that buyers can't find homes for sale when there are still so many foreclosures to deal with?
One reason is that investors have bought every bargain in sight. Those with the money recognize good buys and investor money poured into the real estate sector. Another reason is that home building slowed down to a snail's pace during the recession and we were not building enough properties to keep up with our muted household growth, let alone older homes which had to be replaced. Finally, the most recent long, cold winter put a lid on new listings. This effect we have hypothesized to be temporary and already we are seeing numbers that support this hypothesis.
But there is another reason and this reason is psychological. Most who list their home are "moving up" to a bigger and better home or if they are closer to retirement, they are trading down. However, if they don't believe they can find the home they want, they will obviously be reticent to list. So the dearth of listings is actually causing some not to list. Is this temporary? We believe so. As more homes become available, more will list their homes. We are not looking for a flood, but more of a balanced market. Meanwhile, if you are thinking about selling--this may very well be an opportune time.