Sellers’ reluctance to enter market now and scarcity of quality homes is seen in the decline of inventory levels across the nation. This has left consumers with little choice when it comes to buying a home. A lot of competition has cropped up among consumers, with those in urgent need even increasing their budgets.
For instance, take television editor David Dennick and his wife Denise. Their search for a perfect home had them increasing their budget by $25,000, The Los Angeles Times reported.
"It is much more competitive than we thought," said Dennick. "It is just frustrating because we thought we would really be able to buy a house; we are a middle-class family."
But the problem faced by Brian McCord and Jamie Blondin is shorter marketing time. Their home buying decision was finalised for them by the presence of another potential buyer with a measuring tape.
"Not only were they looking, they had a measuring tape," McCord told the Chicago Tribune. "And that made us much more nervous," Blondin said, adding that the couple promptly made an initial offer of $626,000 for the $649,000 house, thereby finalising the deal.
“No one likes to rush... when you find a good opportunity, you have to pounce. You can't hesitate,” Real estate agent Warren Davis told the Chicago Tribune.
Such situations where competition is fierce and consumers end up increasing their budget are prevalent in all markets where inventory is low. Also, cash is king as consumers with ready cash often end up bagging the property as it speeds up the process.
Meanwhile, the reason for low inventory levels is mainly because of seller’s lack of faith in the current market. Above 80 percent of Redfin Real-Time Home-Seller Survey respondents said they believed they would get a higher price for their home by waiting one to two years.
Sellers still believe it is a buyer’s market with 61 percent of respondents saying it is a good time to buy than to sell. Also, a majority seems to feel that renting is a better alternative to selling, thereby reducing inventory levels.
“In a typical market, when a homeowner buys a new home the supply of homes on the market is reduced, but it is replenished when she sells her old home. In a market where many owners are buying new homes but electing to rent out their old home rather than sell it, supply is reduced and not replenished. This is likely one factor pushing inventory ever-lower in 2012,” the report said.
