Rising home prices in certain areas of the country have left some homeowners feeling too scared to sell. Even though they know they will get a good price for their property, their fear is not being able to find anywhere else to buy.
An article in Money.CNN.com highlights the shortage of available homes in cities such as Los Angeles, New York, Washington DC, San Francisco and Boston which is making it very difficult for buyers to find properties they’d like to move into, or which they can actually afford. Apparently it is becoming quite common for real estate brokers to hear a homeowner would like to sell up but is too scared to do so in case they can't find anything else. The competition for available homes is often so strong that buyers need to be prepared to pay cash.
Figures from RealtyTrac show the number of all-cash deals reached a record high of 43% of all home sales during the first quarter of this year. Homeowners may have seen their property value soar over the past few years, but are unable to sell because they cannot afford anything else nearby. The most extreme examples can be found in San Francisco where the number of homes for sale dropped by more than 8% to the year ending in March, while listing prices increased by 11.5% to reach a median of $867,000. As inventory levels decline it pushes up prices and makes it even more difficult for buyers to upgrade to a bigger home. If they are unable to sell then this reduces the number of lower-priced homes available for first-time buyers.
Things are little better on the other side of the country in Boston where demand is so high that real estate agents are actively seeking people willing to sell their home. Some people are even receiving unsolicited offers for their home. When this happens it can be extremely tempting to take the offer, and this article points out one way sellers can protect themselves is to make the sale dependent on their ability to find a new home. This can be an extremely good idea, as even a good offer may not be enough to buy another property that is better than the home being sold. Some people are choosing to stay put for the moment at least, and are investing in upgrades to their current home before planning to try to move again in a couple of years or so, in the hope that the market won't be so competitive.