Why wannabe sellers are looking but not listing their homes
Call them the frustrated wannabe sellers — eager to list their homes for sale this spring, but feeling locked out of their markets by severe inventory shortages and rising prices that are occurring in many parts of the country. They want to move. They believe they could sell relatively quickly. But they can’t find affordable, desirable replacements for their current homes because there are fewer to choose from. So they don’t list, thereby contributing to a pernicious cycle that worsens the inventory squeeze.
According to the National Association of Realtors’ latest data, total listings of homes for sale are down by 8.1 percent over the past year alone, and they have fallen year over year for 33 consecutive months. A new study by Trulia.com found that inventories have sunk to their second lowest level since the company began tracking them in 2012. Meanwhile, prices are up in major segments — median starter homes by 9.6 percent for the year, trade-up homes by a median 7.5 percent.
The wannabes are folks like these:
— David Roberts, a high school teacher in the Nashville, Tennessee, area, tells me he’s been looking for months for an affordable replacement for his current home, valued around $188,000. He’s been told his house “would sell in two weeks.” But prices of suitable replacements are rising fast — up 10 percent in the past year — and the pickings are slim anywhere close to the city. “So where do we go?” he asks. “We are looking but not listing.”
— In Walpole, Massachusetts, 76-year-old Michaela Tomaselli wants to sell her four-bedroom ranch house and has “looked at everything” that’s available locally. “But I can’t find a place to go” — what’s out there either costs too much, doesn’t have the single-floor arrangement she needs or isn’t in good condition. “I don’t want to go into a condo,” she says. “I wouldn’t be happy there” after years in a detached home on a one-acre lot. So she, too, is looking but not listing.
— On Chicago’s north side, Mark Zipperer, who’s in the business — managing broker/owner of RE/MAX Edge — finds himself in a sticky situation. He wants to sell the condo unit he’s living in and could do so quickly. But he’s not finding what he wants as a replacement. Plus, he’s reluctant to give up his 3.1 percent fixed-rate mortgage to buy a new place. The result: He’s not listing.
The wannabe seller squeeze is hardly the main cause of tight supplies of houses for sale nationwide. Researchers cite such key contributors as low levels of new home construction, heavy investor activity converting affordable homes into rentals, and seniors remaining in their homes rather than downsizing.
But the “where-will-we-go?” factor is significant. As part of a national survey of homeowners last October, realty firm Redfin found that among the top reasons given by a sample of owners who might like to sell but are not listing were:
— “I’m worried I won’t be able to find a home to buy”;
— “I can’t find another house I like”; and fears about pricing and affordability.
In high-demand, high-cost markets such as northern Virginia, realty agents run into the problem constantly. Amanda Davidson, a broker in Alexandria, told me “I have a couple who want to downsize, but they’re reluctant to make the move. I don’t blame them, either. If they put their house on the market, it’s going to be gone overnight, and they’d have no place to live.”
Boston-area realty broker Anthony Lamacchia calls this “a national epidemic” that might be lessened if sellers and buyers would consider some win-win compromises, even if they seem unpalatable at first: Sellers should be open to buyers who need to sell their current homes in order to come up with the cash to close on a new home. Sellers can do that by not automatically rejecting contract offers that come with “subject-to” contingencies giving the buyers a reasonable time to sell and close on their house.
For their part, buyers need to be open to delayed move-outs by sellers who haven’t found a new home. Buyers can offer “rent-back” arrangements where sellers can stay in the house a while after closing, paying monthly rent to the new buyers, and giving themselves time to find a new place.
Lamacchia concedes these ideas won’t work for everybody, but they “just might loosen up” the inventory gridlock a little. They’re definitely worth considering.