Home Buyers Face a Balancing Act
NEW YORK (TheStreet) -- Talk to any Realtor these days and you'll likely get an earful about "limited inventories."
That's a big departure from the past few years, when home sellers were eager, for a variety of reasons, to pound those "for sale" signs into their front lawns.
While existing home sales eased in December, the number is 12.8% higher than in December 2011, according to the Washington-based National Association of Realtors.
All together, total U.S. home sales last year rose to 4.65 million, up from 4.26 million in 2011, the NAR says. That's the highest total since 2007.
The story now in the U.S. housing market is all about demand.
"Record low mortgage interest rates clearly are helping many homebuyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales," says Lawrence Yun, chief economist at the NAR. "The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013."
But there's another issue that could affect the housing market in a big way this year. In essence, the script has flipped from 2007 to 2012, as homeowners are more inclined to sit on the sidelines and not sell their homes -- at least not right now. Over the past few years, there has largely been more sellers than buyers, forcing home sellers to reduce prices and keeping homes from getting offers from multiple bidders.
According to Redfin, a Seattle-based online real estate broker, only 49% of 895 homeowners "with intent to sell their homes" surveyed plan on selling their homes in 2013, and only 22% believe now is a good time to sell.
Mainly, that sentiment is tied tightly to a perception that home prices are rising: 81% of homeowners surveyed believe prices will rise in 2013, and 34% say that "missing out" on future home price gains is the primary reason they are holding off on selling their homes.