Despite new fears that the latest housing boom may have run its course, many homeowners are apparently waiting for further home price gains before they list, according to the July Realtors® Confidence Index survey.
Of the Realtor respondents in that survey, 47% said they had “potential sellers” waiting in the wings for even bigger gains, whether they actually materialize or not.
This is somewhat surprising, given the fact that the “B-word” has been thrown around for months now, and is finally being uttered by big names like Karl Case of Case-Shiller.
Additionally, the home buying season seems to be winding down for the year, with new home sales the first sign of a slowdown so far, whether it is the fault of higher mortgage rates or not.
Of course, it’s not necessarily greed that is behind the wait.
16% of Agents Reported Working with a Former Underwater Homeowner
A decent chunk of those waiting may have no other choice than to wait, considering the fact that nearly 20% of Realtors are working with homeowners who used to be underwater on the mortgage.
Even if they’re no longer explicitly underwater, home sellers typically need a bit of an equity cushion to sell, given the high costs and commissions involved.
So these near-equity owners may want to sell, but must continue to be patient and hope for more home price gains.
Others may be trying to turn a profit after many dark and seemingly hopeless years. After all, if they’ve made it this far, why not stick it out a little longer and actually have something to show for it?
Especially if they’ve got a low mortgage rate, either via HARP or traditional refinance, or thanks to an adjustable-rate mortgage that unexpectedly adjusted lower, thanks to extremely low mortgage indexes like the LIBOR.
If you’ve finally got a super low mortgage payment and hold hope for a higher valuation, why sell now? Conversely, if you’ve gone from deeply underwater to above ground in what seems like a matter of months, you might have reason to be skeptical about fetching an even higher price later.
And the same rule can’t be applied nationwide – there are areas that have experienced larger bounces than others, such as Phoenix and Vegas, which are now considered bubblicious. Whereas others have yet to experience any notable home price gains.
Underwater Sellers Are Also Looking to Buy
Interestingly, more than half of the underwater sellers (53%) cited in the survey are looking to buy another property.
It’s a strange logic, somewhat of a lateral move, but perhaps sellers want to forget about the property that didn’t work out so well for them. Or maybe they just think they can sell their existing property at a premium, and then find something a bit more affordable elsewhere.
It could be that they’re downsizing, or moving from a condo to a house or vice versa. Either way, it’s nice to see that more than half of the victims of the housing crisis are seemingly still bullish on real estate.
Once more sellers finally do pull the trigger, housing inventory should continue to increase, though not spiral out of control if sellers turn to buyers.
Read more: 10 Ways to Build Home Equity