Posts made in September 2015

Reasons for the lack of inventory

A few weeks back I posed the question- Why is there a lack of inventory when sales numbers are up and prices are too?  I mean, on the surface that just doesn’t make sense— if prices are up and there are ready, willing and able buyers, then sellers should be pushing and shoving to get in line to get their houses sold.

Here’s a few thoughts on why sellers are sitting on the sideline:

1)  Owners lack sufficient home equity to be able to sell and then buy their next house.  Yes, prices are up, but much more so in certain areas than in others.

2)  Mortgage lending requirements remain tight, forcing some to the sidelines because they won’t now qualify or they fear they won’t.

3)  People that were hurt financially in the Great Recession just aren’t up for the fight that buying a new home would entail.

4)  Unless an expanding family is the reason prompting a move, people want and are demanding HGTV quality in their next home, and those high end amenities just don’t measure up with their budget.  ie. champagne tastes, beer budget syndrome.  People figure that if they’re going to downsize they must have a higher end lifestyle, and those may be unrealistic expectations based on their financial situation.

5)  Wages haven’t kept pace with costs.

6)  Millenials are not jumping into the home buying experience in sufficient number to push the home buying train out of the terminal.  Millenials are lagging far behind previous generations in buying at the same age.  Because of this, Gen Xers have nobody to sell their homes to so they, in turn, can purchase the boomers’ homes.  There are lots of reasons why Millenials are not buying.  These include chronic underemployment (the barista with a degree syndrome), burdensome student loan debt, and an adversity to taking on housing debt due to their earlier observations of their parents losing homes in the Great Recession.

At any rate, inventory per buyer is down 15% from a year ago and almost half from 4 years ago.  What changes the trend?  Basically, one or more of the aforementioned factors must be unwound.  Only time will tell how that plays out.  Stay tuned.  I’ll keep you posted.



Don’t be a Wal-Mart shopper!

The modern consumer is stereotyped as buying whatever is cheapest. Of course, you get what you pay for, but there appears to be little concern for that in the mad rush for instant gratification- buying as much as you can with the cash and credit you have available. Only the sticker price matters.


Now, I’m not too keen on that when I buy anything, and I’m especially none too keen on it when it comes to buying houses. Take two houses side by side, one brick and one with vinyl siding. Otherwise they’re the same house. Guess what, the brick one is worth more- maybe 5 or $10,000 more. Now, that may be simplistic, but when one goes house shopping, it’s important to do a cost/benefit analysis to determine just what is the best deal for you. (And guess what, it’s not always the cheapest.)


You know, a big plus of being a homeowner is that it makes sense to make long-term investments in your home. I mean, what tenant is going to plop down $4000 for granite countertops? Right, none. But many a homeowner will take that step because they’re going to be there a long enough so they can recoup their investment- either in enjoyment or resale value, or both.

When it comes time to buy a house- do not a Wal-Mart shopper be! Be a value shopper!