Why is the For-Sale Inventory So Low Today?

 home-search-magnify-1Existing home inventory is low because…

  • Many homeowners remain underwater: CoreLogic estimated 5.1 million owners ‘underwater’ as of Sept. 2014
  • Expiration of Mortgage Debt Forgiveness Act at end of 2013 reduced short-sale supply
  • Foreclosure-to-REO flows have declined, thus REO sales down
  • Many homeowners have no debt or low-rate debt…About one-third of homes owned ‘free and clear’ of debt
  • BEA estimated average interest rate on debt outstanding is 3.9%.

FMCC SF Webinar 1-22-15-8

New home inventory is low because…

  • Home builders are concerned about future demand, tight credit
  • Existing ‘trade-up’ movers may stay put
  • Household formations have been exceptionally low
  • Acquisition-Development-Construction credit relatively ‘tight’
  • Lessened inventory helps to sustain price increases.

FMCC SF Webinar 1-22-15-7

 Source: FreddieMac What to Expect in the 2015 Housing Market Report

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