Market Update: Lack of Inventory Stunting Sales

posted on February 12th, 2014 | filed under: Uncategorized

Trends FebruarySales of single-family, re-sale homes slumped to their lowest level since January 2011 last month.

Lack of inventory is the culprit. With 5,783 active listings on the market, we have only 123 days of inventory. In a normal market we would see around 180 days.

One would expect with the surge in appreciation over the past eighteen months, there would be more sellers on the market. Not!

Let’s run down the reasons for the lack of inventory, and why it will continue for the foreseeable future.

First, it’s the economy! The local economy is picking up.

Second, taxes! Property taxes are based on the sales price and can only be adjusted upward each year by 2% or the rate of inflation, whichever is lower. Only when the home is sold can it be re-assessed to the sales price. Home owners are staying put.

Then there’s capital gains taxes when the property is sold. With all the appreciation in the area, that could be substantial, regardless of the $500K exclusion for married couples.

Third, where are sellers going to move to? Moving up in the local market incurs a hefty increase in property taxes, not to mention the higher price of the new home.

Finally, why move when the home is appreciating so much and fueling the home owners net worth?

posted by Jeff DeChamplain

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Jeff DeChamplain