Why are more Homeowners Staying Put?

By
Real Estate Broker/Owner with Zion Realty
https://activerain.com/droplet/4xzn

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. 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Debi La Rosa 01/30/2015 05:15 AM
Topic:
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Location:
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Ambassador
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Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

Yep, it's a problem everywhere. Dick #4 - brings up a nearly identical situation that we're seeing in this market. I always remain optimistic - and hope 2015 inspires more owners  to list their homes. 

Jan 30, 2015 04:51 AM #6
Rainmaker
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Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Dick - When the move-up buyers don't move-up it backlogs everyone else.

Raymond - I'm optimistic for this year unlike last year!

Debb - It seems that our market here in Arizona has been quite different from others. We have had a gluttony of homes listed for sale over the past year or more and it's really paralyzed the buyers. They have so much to choose from they want to just keep looking.

Jan 30, 2015 05:57 AM #7
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I definitely see the underwater thing here in our neck of the woods.  And this year, we're already seeing more short sales from those that have been struggling to hang on, in hopes the market would bring up values.  We just didn't seem to crest that high yet.

Jan 30, 2015 07:01 AM #8
Rainmaker
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Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Chris - The Short Sales have dried up considerably here because of the increase in home values over the past three years. You can still find them here and there but traditional sales definitely rule the market now. Even REO's aren't that prevalent anymore. 

Jan 30, 2015 07:13 AM #9
Rainmaker
1,433,977
Yolanda Cordova-Gilbert
Richmond, TX

Nicole,

 Great great blog, for us we are downsizing we love our home just have not found the perfect home to move to we love our home so we have no rush to move!

Jan 30, 2015 07:46 AM #10
Rainmaker
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Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening Nicole,

Excellent report because we are seeing this as a new normal. We love our home and keep updating and don't want to move! We love our pool and floor plan and just pick a project a year to make it more comfortable. I see many doing the same thing!

Jan 30, 2015 09:07 AM #11
Rainmaker
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Rob Thomas
Prestige Homes of The Tri Cities, Inc. CALL....423-341-6954 - Bristol, TN
Bristol TN-VA & Tri Cities Agent, ABR, GRI, e-Pro

Nicole Doty - Gilbert Real Estate Expert ....we have a lot of inventory and it's still a buyers market ....Great post about your area!

Hope you have a great weekend!

Jan 30, 2015 09:20 AM #12
Rainmaker
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Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Nicole Doty - Gilbert Real Estate Expert ~ it was so nice finally speaking with you today... I really enjoyed our convo! As far as folks making a move, hopefully low interest rates keep, and homeowners recoup enough equity to make it worthwhile... BTW: another stellar post

Jan 30, 2015 09:24 AM #13
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Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

Nicole, We have plenty of inventory here and new construction stats are up. Many may still be underwater but I do know quite a few people who also love their home and wouldn't think of selling and moving!

Jan 30, 2015 10:16 AM #14
Rainmaker
797,809
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Nicole - There are some good points to your post, however, I feel one of the biggest reasons people are not moving out of their homes is because they truly like the home and the area they are living in, and do not want to make another move (getting older and not willing to move as well). I also think people are much more cautious now (after the housing market burst) than they were before, and are not so inclined to move just because they can. I would also agree with you that many homeowners are still underwater, and hoping that eventually their home value will rise to a point where it is greater than their mortgage.

Jan 30, 2015 11:08 AM #15
Rainmaker
679,919
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Yolanda - It's a tough decision to downsize when you really do already love where you live.

Dorie - The statistics on the amount of home improvement projects being done the past few years would indicate that people are once again willing to invest in their current property.

Rob - It sounds like we're in the same boat!

Jon - It's encouraging to my market because we haven't had enough homeowners willing to stay put. We are definitely not having problems with the move-up buyers. 

Wanda - If you read the blog posts around here It's been sounding like my market has been the only one with high inventory so it's interesting that you and Rob also are experiencing a buyers market as well.

Troy - It's been quite awhile since Americans were simply content with their homes instead of chasing the next big house. Maybe we've finally hit the point again where people will just stay put and do small home improvement projects to make their home what they want it to be.

Jan 30, 2015 01:06 PM #16
Rainmaker
4,949,656
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Nicole Doty - Gilbert Real Estate Expert  our struggling economy needs to gain strength in order for us to see homeowners who are confident that the real estate market will not again tank and/or they find themselves unemployed....

Jan 30, 2015 07:32 PM #17
Rainmaker
3,157,175
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Home and Condo Specialists

Yes, we are finding that those who want to move, cannot because of the lack of inventory!

Jan 30, 2015 07:49 PM #18
Rainmaker
679,919
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Barbara - Everytime I turn on the news or read the latest jobs report the folks in charge seem to be convinced that our economy is fine but I'm just not seeing it yet.

L & S - There are many markets experiencing that as well!

Jan 30, 2015 11:26 PM #19
Rainmaker
2,972,280
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Alot of sellers want to have a home to go before they are ready to sell. With low numbers of homes for sale,  it starts a cylce of waiting

Jan 31, 2015 12:38 AM #20
Rainmaker
1,593,530
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co. Notary Services, retired Realtor

Excellent post Nicole. Even with our low inventory here there are some very good deals that are just sitting there... it a couple of cases (my own flip for one) it really has me scratching my head.

Jan 31, 2015 07:47 AM #21
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Robert Vegas Bob Swetz
Realty ONE Group - Las Vegas, NV
Las Vegas Henderson Homes for Sale

Hello Nicole ... wonderful written post and I think as a fairly new member to the ActiveRain network, compared to "Old Timers" like me you have been adding a new "Refreshing Twist" to AR 

Keep up the great work and your post has been featured to the group:

Addicted to Active Rain

Jan 31, 2015 10:51 AM #22
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John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Walnut Creek, CA
#MortgageMadeEasy Walnut Creek, CA 484-680-4852

Nicole, I'm seeing many of my clients FINALLY have equity from when they bought years ago.  This means their neighbor's values have increased too - this will hopefully be cause for many sellers to take advantage.  So many markets need the added inventory right now.

Jan 31, 2015 02:35 PM #23
Rainmaker
679,919
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Scott - We've been in a cycle of buyer paralysis because they have way to many homes to choose from coupled with record low interest rates so there really is no pressure on the buyer to make any immediate decisions. 

Bob - I got stuck in a couple of my flips last year. I was the most upgraded, lowest priced home in the neighborhood yet they just sat and sat and sat. No real explanation.

VB - Thanks so much Vegas Bob! I'm glad you and other members are enjoying my posts!

John - It sounds like you might finally be on that tipping point. Be ready to start getting all those calls!

Jan 31, 2015 10:40 PM #24
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Robert Vegas Bob Swetz
Realty ONE Group - Las Vegas, NV
Las Vegas Henderson Homes for Sale

Your very welcome 

Feb 04, 2015 02:29 AM #25
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