In my experience, there are several types of properties that are usually not going on the market anytime soon. This can be difficult for potential buyers that are eager to buy property in the South Bay, as prices are steadily creeping up, but use these as gauges to predict which homes will, or will not, be on the market in the Hollywood Riviera anytime soon. I recently had some of my ideas confirmed by an article titled “Why Aren’t There More Homes for Sale?” on Redfin.
About 19 percent of homes in the US right now are what is considered “low equity”. This means the owner of the property owes more than 80% of the value of the home and is, therefore, not in a position to sell. Many of these homes were purchased during the last housing bubble and are now worth less than what the owners paid for them. These owners are going to wait until property values go higher than they are now so they can break even, if not make a profit on their investment.
Homes with a low mortgage rate are also probably not going on the market soon. About 16% of all homes owned right now have excellent mortgage rates and the owners are not going to sacrifice those great rates for possibly higher ones with a new property. Homes that have been refinanced or purchased in the last 7 years are also probably not a likely contender for listing. Most homeowners stay at least 7 years, on average, in properties they purchase if they live in that property.
Last, homes purchased by investors are probably being held as investments, for rental income or potential resale in a future market where home values have raised more. Only “flippers” and new home builders are investors that will be turning out new listings in the near future. Unfortunately, that doesn’t solve our low inventory issues at the moment.