As you likely know, the housing market has been struggling with inventory for years.
Years of low production from home builders certainly play a part in this shortage, but an increase in construction isn’t the fastest way to solve the issue. Existing homeowners —many of whom are currently hesitant to sell — factor in, too.
Here’s what is keeping homeowners in place (and how it impacts housing supply).
Low Inventory
As mentioned above, low inventory has a roundabout effect. Because there are fewer homes to choose from, some homeowners fear entering the market and not having many options. As a result, they stay put, keeping supply low.
Mortgage Rates
About 80% of current homeowners with outstanding mortgages have interest rates below 5%, so selling their home (and financing a new one) would mean trading their low rate for a higher one. Many would rather wait for rates to drop before selling their homes.
Rising Home Costs
Some homeowners don’t want to enter the market simply because of home affordability. Home prices are up, as are homeowners insurance costs and, in many areas, property taxes.
Aging in Place
For older homeowners, aging in place is a more appealing option than finding and getting used to an entirely new property. Many opt to renovate their existing homes for accessibility instead.
