6 Ways to Explain Why Littleton, CO Housing Inventory is Low
Everywhere you turn, there’s a new story about how the lack of homes on the market is driving up prices and driving buyers crazy. But what are the reasons behind this trend? Hasn’t our economy recovered?
- Many home owners are still underwater. Nationally, one of five homeowners with a mortgage still doesn’t have enough equity to sell. This isn’t the same situation as we saw during the depths of the housing crisis, but it’s still making its mark on inventory levels. Although rising prices may slowly reduce the number of home owners who owe more than their property is worth, Art Recek, President of Mountain Lava Real Estate, Inc. predicts that significant numbers will continue to be equity-challenged for several years to come, especially in Arizona, California, Florida, and Nevada. This is not as relevant here is Colorado…aren’t we lucky?
- Boom buyers are still holding out.About 16 million families bought homes in the peak of the boom around a decade ago, and many are still waiting around to make a profit, even if they aren’t underwater. Even if the economic prediction that the national median price will be higher than the peak prices of 2007 during the next year, comes to fruition, many of these peak buyers will have to wait another few years before they realize much profit on their homes.
- The inventory shortage is squeezing move-ups.Owners who may be ready to move into a larger or more expensive home are often considered hidden drivers of the market. But right now, price instability and the lack of available homes is causing this group to hold off because they are afraid to put their homes on the market, knowing it will sell fast, but then what? They are afraid, because of “next step up” inventory levels are sparse, they will not be able to find what they are looking for.
- Investors aren’t ready to sell single-family homes that they’re currently renting. They’re making money from both rising rents and home price appreciation. That’s why Art Recek with Mountain Lava Real Estate, Inc. cautions against assuming they’ll “sell their mini gold mines to homeowners anytime soon.” The upside? At least some young prospective owners have access to a relatively affordable alternative to apartments, where they can start families while they wait for entry-level homes to come on the market.
- New-home construction is still relatively low. It may be tempting to blame this on the builders, because during the crash in 2009, thousands of smaller builders closed down, and many of those who survived did so by selling off their inventories of prime real estate intended for future construction. Art Recek predicts that builders will make a dent in the higher-tier housing market, but this won’t help as much in the lower end, first time home buyer inventory
- Baby boomers are running behind. Everything from later retirement ages, longer careers, better health, and loss of household wealth/equity during the latest recession have contributed to a slower-than-expected timeline for this generation. Art Recek, President of Mountain Lava Real Estate, Inc. predicts that this will change, as many must convert their equity into cash while they can still enjoy it, and yet others won’t be able to afford the costs to retrofit current homes in order to age comfortably in their home.