It’s a seller’s real-estate market, but who’s selling?

The supply of U.S. homes for sale, known as inventory, has dropped to some of the lowest levels since before the Great Recession. In June of 2016, the National Association of Realtors said that inventory dropped nearly 1% from May to about 2.14 million homes, a supply of about 4.6 months, compared with a typical supply of 6 months in a healthy market. (That means that it would take just 4.6 months at the current sales rate to deplete the entire inventory of homes for sale in the U.S.)

Not only does the low housing inventory mean a bidding war for buyers, but sellers who may want to move to a smaller home and stay in the same market are quite often stuck -- because of the rise in prices for smaller homes that are being fought over by both first-time buyers and downsizing empty-nesters.

Nationally, the number of starter homes (median price of $154,156) in the first quarter of 2016 has dropped by more than 43% since the same period in 2012, and the price buyers will have to pay for those homes has risen 5.6% since 2012, according to a May report by Trulia. So-called “trade-up” homes, with a median list price of $267,845, have fallen by 41% since 2012, they also reported.

Overall, inventory numbers are down nearly 6% from a year ago. The tight inventory numbers are also helping push up housing prices, with U.S. median homes prices rising to $247,700 in June, up 4.8% from a year ago, the NAR said.

“I am seeing people that literally will never be able to move,” said Joe Winpisinger, a Re/Max Realtor in Cape Coral, Fla. “The homes they are downsizing to have gone up exponentially more than the homes they have to sell,” he said.

When it comes to alleviating the inventory shortage, Winpisinger is actually encouraging his clients to sell, but build a new home instead of buying an existing one and pocket the savings. A new 2,000-square-foot home could be built for as little as $177,000 according to HomeAdvisor.com, well below the aforementioned median sales price of a existing home of $247,700, and has the advantage of being a brand new home. “Existing homes are way overpriced compared to what you can build new for,” said Winpisinger.

Ref: http://www.marketwatch.com/story/its-a-sellers-real-estate-market-but-whos-selling-2016-08-03

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