One of the biggest barriers to an even more robust recovery
in the housing market is a lack of supply. There are simply not enough homes
listed for sale to meet the demand—and part of that is because a growing number
of home buyers are not selling their previous homes. Lack of inventory
and steady demand have kept home prices moving upward.
"As people are starting to move, they're also turning into landlords by choice. And that is definitely having a dent in the inventory numbers," said Nela Richardson, chief economist at Redfin, a real estate brokerage. "Our agents are seeing people come through their door with the cash in hand to buy that next place. A lot of them obviously don't need that equity in their former home, or they're able to tap some of it out and then use it to buy the next place."
It's a strange new irony in housing. Lack of supply is driving prices higher, which is pricing some demand out and driving up rental demand.
"As people are starting to move, they're also turning into landlords by choice. And that is definitely having a dent in the inventory numbers," said Nela Richardson, chief economist at Redfin, a real estate brokerage. "Our agents are seeing people come through their door with the cash in hand to buy that next place. A lot of them obviously don't need that equity in their former home, or they're able to tap some of it out and then use it to buy the next place."
It's a strange new irony in housing. Lack of supply is driving prices higher, which is pricing some demand out and driving up rental demand.
For others, however, the rise in home prices is providing useful
equity to buy another home while still holding on to their old home, which is
then providing lucrative rental income.
There are no hard numbers as to how many buyers are
holding on to their previous properties, but there is plenty of anecdotal
evidence, especially as rental demand and rent rates continue to surge. So, instead of underwater homes hurting the housing market they are driving up rental rates and home prices.
