Many real estate markets around the Country are suffering from a severe lack of inventory. Buyers are ready and eager to jump into homeownership but there just aren't enough homes available for sale. The latest chart from the National Association of Realtors may hold the key as to why there seems to be a growing frustration among willing and able home buyers:
Since 2001 the average amount of years a homeowner stayed in their home before selling was 7.23 years. In 2014 alone that number jumped to 10 years. Homeowners are now staying almost 3 additional years in their homes before selling. The real question is Why? What is motivating homeowners to stay put?
The first and most obvious reason is Low Interest rates. Mortgage interest rates have been hovering at historic lows for years now. Even those homeowners who took out a mortgage when rates weren't around 4%, have been able to refinance in the past few years to get their mortgage payment even lower and they aren't so willing to give up those low payments right now.
The second reason homeowners aren't selling is because many of them are still underwater in their mortgages. The worst of the economic recession may have been put behind us but the truth remains that hundreds of thousands of homeowners still owe more on their mortgage than what their home is actually worth. Congress continues to debate and re-authorize the Mortgage Debt Forgiveness Act each year allowing homeowners the option of putting their house up for Short Sale without having to worry about the tax implications they would have to face otherwise. However, putting your home up for Short Sale can be a daunting and overwhelming task and some homeowners aren't willing to put themselves through that process.
The third reason many homeowners have been unwilling to let go of their current residence is because they are considered the "move-up buyer". These potential home sellers are also potential home buyers. Some of these homeowners would love to place their home on the market for sale but live in a real estate market that has seen home values increase exponentially. They most likely purchased their current home at the height of the real estate boom in 2005 and now they're stuck between not having quite enough equity in their own homes to sell without taking a small loss, and yet they also now can't afford the new higher prices in their area.
Lastly, a big reason there aren't more long-term homeowners selling their properties is they can't gain financing themselves to purchase their next home. Many of these homeowners haven't been in the market to purchase a home since the tough new lending standards were enacted. Bigger downpayments, higher FICO scores, more required documentation, and lower loan-to-value and debt-to-income ratios are all the norm. If the move-up buyer can't buy, then they also can't sell either. Although lending restrictions have begun to ease a bit it will still take some time before we see a better balance in mortgage lending.
Could 2015 finally be a break-out year for home sellers? There are many positive signs that lead us to believe this could finally be a turning point. If you have been considering whether this is the right time for you to sell your home in Arizona, contact us at ZionRealtyAZ.com. We'll create a free market report and home valuation specifically for you, and help educate you on all of your options.