Many experts are in agreement that the biggest problem facing the market is the supply-demand imbalance. So why aren’t there enough houses to buy?
Homeowners May Not Have Enough Equity to Sell
Even if homeowners are not underwater on their mortgage (owing more than what their home is worth), there are still almost 5 million homeowners with less than 10% positive equity. That isn’t enough equity to cover realtor fees, payment for a new home, upgrades etc.
Builders Have Not Fully Recovered from the Last Bubble Burst
The housing crash of 2018 left over one million residential construction workers unemployed. Unfortunately half of those workers are still laid off. However builders state that labor is tough to find. Perhaps higher wages may bring some of these construction workers back, but many have left the construction business all together or are too old now to do strenuous physical work.
Reluctant to Give Up Low Rates
Those who are locked into a lower mortgage rate may be reluctant to get into a newer mortgage with higher rates. Data provider Black Knight says that many borrowers assume that they cannot get a better deal.
Also, thanks to rising home prices, would-be downsizers can’t find smaller homes that cost much less than their current homes, says Dennis Cisterna, chief executive officer of Investability Solutions, a real-estate investor marketplace.
No Interest in Becoming a Buyer
Although it is a sellers market right now, most of these sellers will have to turn around become a buyer themselves. A 2017 survey from Redfin indicated that one in four respondents that were considering selling said they were hesitant to put their home on the market because they were worried about finding a new home in such a low inventory market.
So What Can Buyers Do?
- Be realistic about how long it will take to find a new home. Real-estate agents can provide an estimate, based on current market conditions.
- Take any necessary steps to improve your credit to ensure the lowest rate.
- Be ready to make a competitive offer when a suitable home comes on the market.
- Be Flexible with the Seller as far as move in dates etc. Just being flexible can help you compete significantly with other buyers
About Michigan FHA Lender, Julie Krumholz
Julie Krumholz is a Michigan mortgage expert specializing in FHA loans. She also has vast experience in conventional loans, VA loans, MSHDA loans, RD Loans, portfolio loans and more. If you are ready to get pre-approved for a mortgage or have any questions about Michigan mortgage lending, contact Julie from Superior National Bank.
Call Julie Krumholz at: 586-382-5482
Interested in information on FHA Loans? Check out: Michigan FHA Loans: Loan Limits, Eligibility and Other Common Questions