IMOVE BLOG
  • iMove Chicago
  • Real Estate School
  • Laws
    • CRLTO >
      • 5-12-010 Title, Purpose And Scope.
      • 5-12-020 Exclusions.
      • 5-12-030 Definitions.
      • 5-12-040 Tenant Responsibilities.
      • 5-12-050 Landlord’s Right Of Access.
      • 5-12-060 Remedies For Improper Denial Of Access.
      • 5-12-070 Landlord’s Responsibility To Maintain.
      • 5-12-080 Security Deposits.
      • 5-12-081 Interest Rate On Security Deposits.
      • 5-12-082 Interest Rate Notification.
      • 5-12-090 Identification Of Owner And Agents.
      • 5-12-095 Tenants’ Notification of Foreclosure Action.
      • 5-12-100 Notice Of Conditions Affecting Habitability.
      • 5-12-110 Tenant Remedies.
      • 5-12-120 Subleases.
      • 5-12-130 Landlord Remedies.
      • 5-12-140 Rental Agreement.
      • 5-12-150 Prohibition On Retaliatory Conduct By Landlord.
      • 5-12-160 Prohibition On Interruption Of Tenant Occupancy By Landlord.
      • 5-12-170 Summary Of Ordinance Attached To Rental Agreement.
      • 5-12-180 Attorney’s Fees.
      • 5-12-190 Rights And Remedies Under Other Laws.
      • 5-12-200 Severability.
    • Illinois Eviction Law (Forcible Entry And Detainer)
    • Illinois Security Deposit Return Act
  • Today's Cool Thing
  • Social Media
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • Flipboard
    • Linkedin
    • Tumblr
    • Mix

Why existing homeowners won’t sell their homes now

4/29/2021

0 Comments

 
Picture
While house price appreciation has been the focus for many looking at the buy side of the housing market, other observers have placed some hope in that appreciation, noting that as demand for housing increases underlying home equity is growing. The two terms, house price appreciation and home equity growth, are essentially the same thing looked at from a buyer’s and a seller’s viewpoint respectively. From the seller’s view, many observers are saying that the opportunity to make a huge profit on a home by listing now should help bring existing homes on to the market, thereby cooling it somewhat. According to the real house price index recently released by title insurance provider First American, however, that may not actually be the case.

First American’s chief economist Mark Fleming (pictured above) and deputy chief economist Odeta Kushi (pictured below), both explained how the confluence of a recent refi boom, the cut-throat nature of the housing market, and the rise in rates through February and March have conspired to lock existing homeowners in their properties more rapidly than we might otherwise expect. They explained how a relatively simple mechanism is keeping homeowners from listing now.

“The rapid pace of annual nominal house price appreciation, just over 14% in February, begs the question: isn’t rapid house price growth good news for existing homeowners looking to move? According to a behavioral economic theory dubbed ‘the wealth effect,’ homeowners are more likely to move if they feel ‘wealthier’ because the value of their home rises,” Fleming said. “Yet, that homeowner would be entering the housing market at a time when all the other homes in the area have likely appreciated by the same amount. While the homeowner’s equity gains boost wealth, the equity gains allow the homeowner to keep pace with the housing market, rather than outpace it. So, if feeling wealthier doesn’t actually help buy, what can incentivize a homeowner to sell? Falling mortgage rates.”

Rates are absolutely key to First American’s outlook, even though rising rates through February impacted affordability. Kushi noted that if you measure affordability by a calculation of rate and nominal house price, homes are still more affordable now than they were this time last year.

Another factor keeping existing homeowners in their homes, though, is the lingering impact of 2020’s refi boom. When rates dropped to 2.5% for 30-year fixed mortgages, just about everybody who could refinanced their homes. As rates have risen somewhat, a new mortgage on a new home will cost that homeowner more per month than they’re currently paying. Moreover, the refinance itself was so recent that many borrowers haven’t yet recouped the closing costs and fees in the form of monthly savings.

While existing homeowners aren’t moving, despite house price appreciation, Kushi explained that it’s first-time homebuyers who are struggling as a result.

“About two-thirds of all home buyers are existing homeowners,” Kushi said. “In other words, most buyers are sellers first. If existing homeowners are staying put, that limits the available inventory of homes for sale for potential first-time home buyers, because you can’t buy what’s not for sale.”

One factor that could help incentivize some homeowners to list is a move to a different market. Kushi noted that moving out and up to a more affordable market is a way a homeowner can circumvent the ‘wealth effect.’ In doing so, they may open up a bit more stock in tighter areas.

In the face of these factors, Kushi and Fleming believe that mortgage professionals should continue operating as they have, expecting extreme competition and tough client conversations.
​
“Mortgage professionals should be aware that the housing market will likely remain a fiercely competitive sellers’ market in the near term,” Kushi said. “Buyers will have to move very fast to keep up with market velocity.  Potential home buyers should have a good understanding of their house-buying power and what they’re willing to spend on a home that suits their needs.”
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.


    iMove Chicago

    iMove Chicago is a full service real estate brokerage.  We are comprised of a team of brokers, leasing agents, dedicated support staff and professionals focused exclusively on delivering the results you demand, deserve, and expect. We bring knowledge, dedication and customer service to all we do. We provide you the information you need with accurate, updated listings that are available if posted. You can rely on iMove's professional, experienced team to help you make informed purchase, rental or sale decisions. At iMove Chicago, we believe that results matter and knowledge delivers.  iMove's team is "bringing Chicago home..."  Together, let's get moving!


    Our Offices

    4422 N Ravenswood Avenue
    Chicago, Illinois 60640


    Ph.  773.856.6200
    Fx.   773.856.6201


    Rusty Payton, EzineArticles Basic Author

    iMove

    Categories

    All
    1601 W Chase Unit 2e
    #1 Im Chicago Real Estate
    2012 Interest Rate
    2800 Lake Shore Drive Apartment For Rent
    $31 Million Apartment
    5415 N. Sheridan Chicago
    Agents
    Agent Safety
    Andersonville
    Andersonville Apartments
    Andersonville Condo Purchase
    Andersonville Farmer's Market
    Andersonville Midsommerfest 2012. Chicago Apartments
    Andersonville Real Estate
    Andersonville Shops
    Andersonville Summer Festival
    Andersonville Wine Walk
    Ann Sather Edgewater
    Apartment Demand Slows
    Apartment Rentals In Andersonville
    Apartments For Rent
    Apartments In Andersonville
    Apartments In Edgewater
    Appeal Chicago Real Estate Taxes
    Art In Andersonville
    Asia On Argyle
    At Properties
    Avondale
    Bark In The Park
    B&B Chicago
    Bed And Breakfast Chicago
    Belly Card Chicago
    Bike Chicago 2012
    Bloomingdales
    Bongo Room
    Breakfast In Edgewater
    Bucky Gear
    Burner App
    Business Card Design
    Buy Owner Closes
    Carbon Monoxide Detectors In Chicago
    Certified Fund To Close
    Chase Bank
    Chicago
    Chicago Apartment
    Chicago Apartments
    Chicago Apartments And Satellite Dish Ordinance
    Chicago Apartments For Rent
    Chicago Apartment Vacancy Rates
    Chicago Bed Bug Ordinance
    Chicago Bed Bugs
    Chicago Building Data
    Chicago City Sticker 2012
    Chicago Farmer's Markets
    Chicago Fire At Park Tower
    Chicago Floor Plans
    Chicago Foreclosure
    Chicago Gangs
    Chicago Lakefront
    Chicago Lease Form
    Chicago Library Edgewater
    Chicago Loan Modification
    Chicago Lofts
    Chicago Neighborhoods
    Chicago Parking Meters
    Chicago Parking Spaces
    Chicago Police District Map
    Chicago Property Tax Assessment Appeal
    Chicago Property Taxes 2015
    Chicago Real Estate Agents
    Chicago Retail Stores
    Chicago Service Dogs And Renting
    Chicago Street Sweeping Schedule
    Chicago Summer Festival Guide
    Chicago Swimming Pools
    Chipotle
    Chris Feurer
    City Sticker
    Coldwell Banker
    Comunity Alert
    Condominium Assessment Post Foreclosure
    Credit Card Surchaege
    Credit Report
    Credit Reports
    Crlto
    Cta
    Dalai Lama
    Debtor's Prison
    Dogs
    Edgewater
    Edgewater Community Council
    Edgewater Gay
    Edgewater Library
    Edgewater Lofts
    Elmwood Park Single Family Home
    Eminent Domain And Mortgage Seizure
    Erickson Ocasio Imove Chicago
    Esgewater
    Fico Score
    Foreclosure
    Foreclosure Information For Renters
    Great Dane
    Halloween In Chicago
    Hamilton's Bar & Grill
    Hamp
    Haunted House
    High Rise Fires
    Homes For Under $200 Month
    Homestead Exemption
    Hot Dogs. Huey's Andersonville
    Hotel Chateau Chicago
    Hotels Skokie Evanston B&B
    Housing Recovery
    I-go Cars
    Illinois Community Association Manager Licensing
    Illinois Loan Modification
    Imove Chicago
    Imove Chicago Agents
    Interest Rate On Security Deposits
    Interviewing Agents
    Jameson
    Jameson Real Estate
    Jameson Sotheby
    Joe Berrios
    Jumbo Mortgage Rates
    Keller Williams
    La Fitness Edgewater
    Lakeview Chicago Apartments For Rent
    Landlords
    Lease Break
    Leasing Agents
    Liability Insurance
    Lincoln Park
    Lincoln Park Chicago Apartments For Rent
    Lincoln Park Single Family Home For Rent
    Loan Modification
    Loan Modification Scam
    Loft Chicago
    Loft Living
    Lofts
    Lofts For Rent
    Logan Square
    Loop And Downtown Chicago Apartments For Rent
    Loyla
    Loyola Student Housing
    Machael Sato
    Michael Sato
    Mobile Do Not Call List
    Mortgage Fraud
    Movies Inthe Park 2012
    National Bank
    News
    Old Town Chicago Lofts For Rent
    Online Marketing Chicago Real Estate
    Panera
    Parade Route
    Parking
    Parking In Andersonville
    Parks
    Phone Apps
    Planter Heads Mag Mil
    Property Of The Week
    Property Tax Bills 2012
    Property Taxes
    Property Taxes Too High
    Prudential Rubloff
    Ranjha V Bjbp
    Real Estate
    Real Estate Sales In Chicago
    Real Estate School
    Real Estate School Chicago
    Real Estate Taxes
    Realtor Prortraits
    Recycling
    Rental Market In Chicago
    Renter
    Renter's Insurance
    Renters Right To Install Satellite Dish
    Rent Increases
    Renting
    Rent Vs. Own
    River North Chicago Apartments For Rent
    River West Chicago Apartments For Rent
    Rogers Park
    Rogers Park Apartments
    Rogers Park Chicago Apartments For Rent
    Rogers Park Map
    Rogers Park Neighborhood Of The Year
    Roost Chicago
    Sales
    Sales Tips
    Section 9(g)(4) Illinois Property Condominium Act
    Security Deposits
    Selecting An Agent
    Sheridan Road Apartments
    Shoplifting
    Shopping Mag Mile Places To Stay
    Single Family Homes For Rent In Evanston
    Single Family Homes For Rent In Lakeview
    Single Family Homes For Sale In Edgewater
    Single Family Homes In Andersonville For Sale
    Sliders
    Social Media And You
    Solutions To The Parking Meter Mess
    South Loop Chicago Apartments For Rent
    Square And Imove
    Staging
    Starbucks
    Starbucks Edgewater Shipping Containers
    Strreeterville Chicago Apartments For Rent
    "three Dog Night"
    Trader Joe's Andersonville Edgewater
    Trulia
    Twitter For Business In Chicago
    Uptown
    Urban Living
    Vacancy Rates In Chicago
    Virgin Mobile Andersonville
    White Castle Food Truck
    Wicker Park
    Wilson Red Line Uptown
    Working With A Rental Agent
    Yelp
    Zebras

    Archives

    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    April 2015
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    November 2011
    May 2011
    March 2011
    February 2011
    September 2010
    August 2010
    July 2010
    April 2010
    March 2010
    December 2009
    September 2009
    August 2009
    July 2009
    June 2009
    May 2009
    March 2009

  • iMove Chicago
  • Real Estate School
  • Laws
    • CRLTO >
      • 5-12-010 Title, Purpose And Scope.
      • 5-12-020 Exclusions.
      • 5-12-030 Definitions.
      • 5-12-040 Tenant Responsibilities.
      • 5-12-050 Landlord’s Right Of Access.
      • 5-12-060 Remedies For Improper Denial Of Access.
      • 5-12-070 Landlord’s Responsibility To Maintain.
      • 5-12-080 Security Deposits.
      • 5-12-081 Interest Rate On Security Deposits.
      • 5-12-082 Interest Rate Notification.
      • 5-12-090 Identification Of Owner And Agents.
      • 5-12-095 Tenants’ Notification of Foreclosure Action.
      • 5-12-100 Notice Of Conditions Affecting Habitability.
      • 5-12-110 Tenant Remedies.
      • 5-12-120 Subleases.
      • 5-12-130 Landlord Remedies.
      • 5-12-140 Rental Agreement.
      • 5-12-150 Prohibition On Retaliatory Conduct By Landlord.
      • 5-12-160 Prohibition On Interruption Of Tenant Occupancy By Landlord.
      • 5-12-170 Summary Of Ordinance Attached To Rental Agreement.
      • 5-12-180 Attorney’s Fees.
      • 5-12-190 Rights And Remedies Under Other Laws.
      • 5-12-200 Severability.
    • Illinois Eviction Law (Forcible Entry And Detainer)
    • Illinois Security Deposit Return Act
  • Today's Cool Thing
  • Social Media
    • Facebook
    • Twitter
    • Pinterest
    • Instagram
    • Flipboard
    • Linkedin
    • Tumblr
    • Mix