We have a dilemma in our housing market right now. There are very few houses for sale. And the ones that are for sale tend to go quickly – sometimes hours after being listed. There are two questions to consider. The first is: why are there so few listings? The second question is: what, if anything, can be done to increase the number of homes for sale?
Sellers are probably enjoying seeing their homes sell quickly and often for top dollar. But for a buyer, especially one who has to buy due to life circumstances such as moving in for a job, a market like this can be frustrating.
A few days ago, I met with a couple a few hours after they moved to Ohio when I picked them up from their hotel. I had the day blocked off to show them houses and show them around the area. They are conventional buyers with a healthy budget (meaning their price range is relatively high). They are open to all kinds of home styles almost anywhere in the county. In other words, it should be super easy for them to buy a house. But it isn’t. Even with almost an entire county to show them, we were able to see three homes. We had two other showings canceled last minute due to going under contract. And they had to decide within three hours of seeing the third house if they wanted to make an offer on it because there were already multiple offers. We didn’t find them a house. Since they want to buy rather than rent, they are living with friends until they can find a house. This is most likely not what they envisioned when moving here. While their story may be unique, their general situation is not. There are plenty of other buyers right now who also want to buy yet can’t find a home or find one and are in multiple offers and their offer isn’t chosen.
One of my agent friends told me about a month ago that he thinks that sellers are afraid to sell. I would disagree. I have yet to have a seller tell me, even in the last few months, that they are afraid to sell. I do think that there are two reasons. The first is low interest rates. Many home owners are refinancing to a crazy cheap interest rate and staying put in their current home.
In my opinion, the bigger issue is sellers don’t know where to go. Yes, if the sellers would opt to sell their home and move, inventory would increase for buyers but where is the seller supposed to move with limited homes for sale? So they stay. And inventory stays low.
The second challenge sellers face is that they would like to move, and are even looking at homes, but they can’t move to a new home without selling their house first. Putting an offer on a home with the contingency of your current house selling is 100 percent normal. The problem I am seeing is that with no inventory and so many buyers, sellers don’t have to take contingent home sale offers in order to sell their home.
Last month, one of my agents called me. She was planning on showing a house listed well over $300K to one of her buyers. Her buyers were preapproved and the home they currently own would have sold quickly. The home they wanted to see was on the market two days and already had three offers none of the offers were contingent on a home sale. Understandably so, the seller was not looking at any offers if the buyer had a house to sell first.
So what is a seller to do if they want to move and even find a home but keep getting bumped off due to a home sale contingency? There are two options. Both with risk.
One option is to sell your home first and then move into a rental until you find the home that you want to buy. Then you won’t need to worry about not being able to sell your house. But there are negatives. What if you can’t find a place to rent on a month to month basis? What if there are no rentals available in your school district when you need one?
Another option would be to see if you qualify for two mortgages. This is the most common of the scenarios but still risky. What if your house doesn’t sell quickly? What if you qualify on paper for two mortgages but the costs of owning two homes — from the mortgages to the utilities and insurance — is more than what you were expecting and you feel financially stressed?
Buying the starter house is easy. It is buying that “upgrade house” when the starter house needs to sell that can be the most challenging. But if you are a seller who is ready to move, check into your options. Talk it over with your spouse if married and your Realtor and see what is best for you. Stay put, do a contingency clause, sell first and then rent or even have two mortgages while the second house sells. I have seen people do all the above. It definitely isn’t a one size fits all scenario. For me personally, I don’t like risk and I am a planner. Most likely I would be one of the sellers who chooses to hang tight and refinance. But just because that would be my choice doesn’t mean it has to be yours. If you have any questions about these options and you don’t have a Realtor, one of our agents at Ryder Realty would be happy to help answer your questions. I hope that you have a blessed week!
Esta Ryder, Realtor
Ryder Realty, LLC