Once the tax credit expired (new contracts had to signed by April 30th) everyone expected that listings would go down. But they haven't...they have gone up. With all of the negative media attention on housing it would be easy to consider that it is because the sellers are distressed in some way. Maybe they lost their job or they are trying to sell the home before it goes into foreclosure.
But here is the real reason why listings are up: Interest rates are at an all-time low. Despite the constant bombardment of negative media coverage, the vast majority of existing homeowners are very credit worthy, live within their means and have stable income. Experienced homeowners have seen interest rates in the 5's, 6's, and 7's in the last several years. And those that have owned homes for longer have seen double-digit interest rates. So, they know that when interest rates are at an all time low - it is time to make a move.
The idea is that if they were ever going to move to a different school district, move up or down in size, etc. now is the time to do it. Sure, they might get a little less for their house this year compared to what they might sell it for a couple of years down the road but that is more than offset by the huge savings in mortgage and interest payments.
This means that homebuyers also have attractive interest rates which are another good time to sell, because more people buy when interest rates are low. Buyers are a little slower to "pull the trigger" on a sales contract because there is moderate amount of inventory around. But many of these potential homebuyers already missed out on the tax credit window because they thought the government would keep extending it or maybe they just weren't ready to enter the market yet. Regardless that window of opportunity has shut. Don't miss this even bigger window of opportunity!
Mortgage rates can make a right turn at any second. Mortgage rates are not low because of anything that the Federal Reserve, Treasury, or Obama administration is currently doing. Mortgage rates are low because of global fear about the economy and financial system. This causes banks and investors to hoard their cash and park it into nice, safe and boring mortgage backed securities. You earn a very low interest rate in return for safety. But the financial markets and the global economy will turn around, and when it does it will move mortgage rates up with it.
Call us with any questions you have relating to residential mortgages (208) 287-1717, we are always very happy to help. We specialize in home loans for first time home buyers, move up buyers, second home purchases, and resort lending. The loan products available to my clients include FHA, IHFA, VA, Conforming Conventional, Jumbo and Super Jumbo Portfolio.
Our primary markets are Ada County (Boise, Eagle, Meridian, Kuna, Star), Canyon County (Nampa, Caldwell, Middleton), and Valley County (Cascade, Donnelly. Tamarack, McCall).
Every market is different. Not all markets are hard hit, many rural markets due to low low cost homes, no crime and family values are booming, looking better than ever.
great points, Regardless of what the sell their home for today, they will make it up on the purchase of their new home.
Another reason for additional inventory is just the seasonality of our industry. Listings almost always increase in the spring and summer since it is easier for families to move when the kids are not in school. It is easier to move in the summer without dealing with all the rain in the spring and the snow in the winter too.