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HOUSING OUTLOOK 2016 continued
which is considered equally favorable for buyers and sellers. But inventory in many cities is much lower and strongly favors sellers.
Homeowners who want to sell and have enough equity to cover the transaction costs face a chicken-and-egg situation: They won’t list their home until they’ve found their next home, and they can’t do that until there are more houses for sale. New construction will help break the stalemate but not anytime soon. A lack of buildable lots, skilled labor and construction loans have held builders back.
Many homeowners don’t have enough equity to move up, and that’s adding to the scarcity of homes, especially at the entry level. Meanwhile, as the economy
has improved, members of the millennial generation are moving out on their own in greater numbers.They want to buy, but many aren’t ready yet. Burdened
by student debt and high rents, they’re struggling to save for a down payment and qualify for a mortgage.
The number of people who owe more
on their mortgage than their home is worth is slowly decreasing. Nearly 13% of homes with a mortgage are underwater by at least 25%, according to RealtyTrac. Distressed sales fell to just 7% of total sales in September, says the NAR.
More than half of homeowners with a mortgage have at least 20% equity, and the vast majority are staying put. Many homeowners are using wealth from their home to remodel. Contractors have
reported rising activity over the past few years, and more often than not, a backlog of projects.
SELLERS NEED A STRATEGY
Once a cow town, Omaha today is a transportation hub and home to Warren Buffett’s Berkshire Hathaway, insurance companies and one of the largest toll- free-call centers in the country. With low unemployment and affordable homes, buyers are eager to make a move. Sellers should be sitting pretty, but the market
is deceptively challenging for them.
With just two months’ supply recently, sellers who want to trade up confront that chicken-and-egg scenario: They can’t sell until they nd a home they can move to. Plus, sales in Omaha have slowed.
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