Inventory of Homes For Sale on the Decline

A few years ago, practically every other parcel of Chicago real estate had a ‘for sale’ sign posted in front as underwater homeowners tried desperately to get out of the crumbling housing market.
While the economy has been slow to recover, the number of homes for sale today sits at historic lows. Why?
On Monday, Redfin released its first survey of home sellers in an attempt to answer that question.
The technology-powered real estate broker surveyed 816 homeowners from 20 U.S. markets, including Chicago, and found that the housing market is filled with reluctant sellers who have low opinions of the market today but expect more for the future.
According to the Redfin survey:
*80 percent believe their home would fetch a higher price in one to two years.
*46 percent would consider renting out their home rather than selling it.
*49 percent cited the economy as a major concern with selling.
*35 percent would choose an all-cash offer over higher, financed offers.
*32 percent intend to price their home higher than nearby comparable sales.
And while 61 percent believe it is a good time to buy, a mere 13 percent believe it is a good time to sell.
“The would-be sellers we surveyed have made it clear that inventory is not going to meaningfully increase any time in 2012, which will limit sales volume gains — and the lift that real estate delivers to the economy this year,” said Glenn Kelman, the chief executive officer of Redfin.
“We believe the main problem is not, as conventional wisdom would have it, that people can’t sell because they’re underwater on their mortgage. The problem with sales volume is that most homeowners just don’t want to sell. And why would they? Most sellers believe prices will only get better over the next two years, and many can now rent their place for more than their monthly mortgage payment.
“We believe the owners who are listing their homes will continue to test demand for higher asking prices, while the builders who have plenty of homes to sell will have a big chunk of the market all to themselves.”