It may be spring – but brrrrrr….its cold out there. At least when it comes to the tight housing inventory that is currently on the Westchester NY market.
Throughout this very long winter, Westchester real estate agents and their buyers have been eagerly anticipating the gush of properties that comes onto the market each spring. All through the winter, the housing inventory has been terribly tight with only the tiniest trickle of new listings.
The sad irony is that buyers have been out and about and are readier than ever to pull the trigger. More so now than I’ve seen since before the crash. The glitch is that there is precious little to show them.
For the past month or so I have been toying with the idea that this may not be the weather at all and that something else is going on. Granted, last month at around this time I was hip deep in snow and shoveling my way out the latest 9 inch blast of the white stuff. That kind of activity gives the mind plenty of time to do its mischief. But it dawned on me that the market was too quiet. This thought was cemented more in my mind when I starting reading real estate blogs throughout the country. After all, if severe inventory shortages are showing up in sunny California, then you can’t blame the problem on old man winter.
But why? I had a couple of thoughts on this issue, but was not getting much from the literature on that score. Apart from encouraging homeowners to list their properties, brokers haven’t delved too deeply into the possible causes of this shortage. However, last week Chris Trapani did just that on Inman News. His article on this issue confirmed some of my own thoughts on this issue. If he is right, this inventory issue isn’t going away any time soon and may become the “new normal” for more than a year or two.
Since 2008 very little new housing stock has been created. Unless you are living in Manhattan or Brooklyn (the two hotspots near me) builders just haven’t been building. That started changing in Westchester about 2 years ago . Today, the builders are back in force in the county. In the city of White Plains, you can’t throw a rock without hitting a construction project. But this stock is being built…it is not ready to be occupied. Further, what new inventory is out there is mostly in the rental market. Most of it is not for sale.
For those who purchased a home from 2005-2007, the housing recession continues ever onward. Although Westchester is recovering and certain high-end areas are back to where they were before the recession or have increased in value, most homes aren’t quite there yet. This means that the seller would have to bring money to the table in order to sell. With prices rising nicely, barring an urgent need to sell, it is highly unlikely that these homeowners are going to put these homes on the market to move up or scale down. If prices keep going the way they are, this inventory will loosen up in a year or two. But for the time being, these homes remain frozen off the market.
For those who purchased after the market crash, they got a bargain. Interest rates were low and the homes were literally in “fire sale” mode, with people getting steep discounts of 15 – 30%. Why would anyone give up a bargain like that unless they had to? The longer these people stay put, the more money they save. Thats a powerful incentive not to move.
Throughout the housing recession, investors gobbled up discounted properties a record rates with all cash deals. Many of these properties are part of the current rental market. But there is no large selling signal out there that would induce investors to add these to the our current inventory. These too are sequestered from the market.
Its not a trivial question. Why sell your house when there are so few options for purchasing a new home? Families considering a move up or a down-size are not moving because of a job change or other life-changing force. Moving is a choice for them. So it can become a vicious circle. Low inventory at one price point can create low inventory at other price points.
My advice to those downsizing is evolving with this market. But right now I’m suggesting that those downsizing take the plunge, sell their homes and if necessary, take an interim rental while they seek out the property they truly want to purchase. This takes the pressure off them but leaves the capital readily available to make that purchase when they find “the one”. Many would be better off selling their properties and renting for a while they take their time locating their new property.
For the move-up buyer, its a bit more complex. A great deal depends on how much they bought their current home for, how much disposable income they have and how cramped they are in the home they are in. If a family is literally bursting at the seams in their current home and the money is really their for a move up, it probably is time to take the plunge and sell. The pain of staying put is too great. For those for whom it would be “nice” to have a bigger bonus room or and extra bath, waiting might be better particularly if the buyer has very specific parameters for their next purchase.
© 2015 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
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