The Lack of Opportunity in a Tight Housing Market and How to Benefit

We have heard about tight inventories in the housing market and I have posted in the past about this phenomenon. But even as the lack of opportunity seems to benefit one segment of the market, the benefits may not be as good in a tight housing market.

Tight inventories may make some home sellers absolutely giddy with anticipation of a sale that may be beyond the true value of the house for sale. Sellers might inflate the price of the home and sit back and wait for the bidding war to begin, potentially driving what should be fair prices to yet another unnatural level. Tight inventories also have some significant and noteworthy downsides.

We took a look back and found that over the last four years or so, the price of a starter home has risen about 5% year over year, said a different way, the cost of a starter home will require 5% more of your income than it did previously. Add in the fact that there are fewer houses in this beginner price range (and many other price ranges) and you have more buyers chasing inventories that have dropped by almost fifty percent in some areas.

According to a recent MIT study, the housing market could actually be hiding its biggest issue behind the veil of lower interest rates. Few people mention the current low interest rate environment as anything but historic. What is seldom mentioned is the historic reluctance of banks and lenders to lend. This study suggests that almost 5.2 million loans were not made in the years following the Great Recession.

It would be cavalier to suggest that these potential home owners should focus solely on their FICO scores and do due diligence to repair them. What many people overlook might be the most obvious: Some of those damaged credit scores belong to people who would like to sell and repurchase. These sellers may not be underwater but the attempt to buy again may be hindered by those poor credit scores. Removing that mobility has stalled the housing market in its tracks and the net effect of that is fewer homes for sale.

So how do you benefit from what seems to be more real estate tailwind that anyone would like? Some sellers are turning to contingencies. A seller contingency acknowledges that fact that the listed home may sell before the seller can purchase a new home. It is becoming more frequent as markets tighten.

Selling a home, in many instances, has now become a coordinated effort with buying the next home tied to the first transaction. Sellers who are becoming buyers need to be sure they have done everything to repair their financial histories if only to make the transaction as seamless as possible. Yes, it is more complicated but that is an excellent reason to stop by and discuss your options.

How can we assist you today?


On behalf of The Jones Group @ Sunriver Realty

Nola Horton-Jones, Principal Broker/Realtor | ABR, C-RIS, e-PRO, GREEN, RSPS, CCIM Candidate

Bryce Jones, Broker/Realtor | ABR, CRS, e-PRO, GREEN, GRI, RSPS, SFR

The Jones Group @ Sunriver Realty | 57057 Beaver Drive | Sunriver, OR 97707

Mobile: 541-420- 3725 | Mobile: 541-420- 4018 | Fax: 541-593- 5123



Licensed in Oregon