May 22, 2015
WHY IS HOUSING INVENTORY SO LOW?
From an article in Inman News by Chris Trapani
- The Taxpayer Relief Act of 1997 with capital gains exclusions of $250,000 for singles and $500,000 for married couples eased the home sale tax burden for millions but in higher priced markets, froze move-up buyers because their gain exceeded the exclusion and created an unwanted tax burden. The flow of buying/selling was disrupted.
- The sustained low-rate environment with purchase or re-fi at tremendously low rates has reinforced staying in place.
- Value disruption in 2008 and 2009 caused some areas to experience a complete reset of values, sometimes up to 50%. Buyers who purchased in these marketplaces at significant discounts contribute to additional frozen inventory.
- Values are not at peak levels across the country. Some areas have reached or surpassed peak levels, but many have not.
- Hope that values will continue to climb.
- Stunted new development. Single family housing starts are at half normal levels.