The latest Zillow Housing Aspirations Report found that 83% of homeowners love their home and 63% of them have no plans on selling their home. And 76% of homeowners would rather spend money remodeling their current home instead of a down payment on a new home. Further, 87% of people who are 55 and older prefer renovation over moving. And 91% of retirees would rather renovate than sell. WOW!
Zillow Director of Economic Research & Outreach Skylar Olsen said, “Homeowners may hesitate to sell because of limited options for them as buyers, but by holding on to their homes, they are themselves contribution to low inventory.” Homeowners have created a self-fulfilling prophecy.
You combine this with rising mortgage rates which cause a “lock-in effect” I am afraid long-term inventory levels will DROP further. I can see summer existing home inventory levels drop under 5,000 by 2020. I also expect to see the number of home sales in total to drop, probably by 20% over the next 2 years. Last year buyers purchased 54k homes and condos and I expect this number will drop to about 45k in 2020.