Mismatched Markets: Understanding the Gap in Real Estate Values Inventory

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A few months ago, Trulia reported that there is a shortage of home in the market. It was recently revealed that homes available for sale were at 3.6 month supply. It dropped by 7.1% compared to last year. In history, inventory should be at 6 month supply for the prices to go lower.

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Generally, homes for sale have three brackets according to price range. It can be on a starter, trade-up, and premium bracket.

Trulia revealed a market mismatch. For starter homes, there are 26.9% of buyers searching versus 21.2% homes listed. This leads to a mismatch score of -5.7.

For trade-up homes, there are 29.6% of buyers searching versus 24.3% homes listed. This leads to a mismatch score of -5.3. But, for premium homes, there are 43.5% of buyers searching versus 54.5% homes listed. The mismatch score is +11%.

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This means the buyers of premium homes have lesser competition. Premium homes have an 11 point surplus price range which is also good news for the buyers.

But why did this trend happen to starter and trade-up homes for sale?

Many homeowners are lacking equity to sell because they are still underwater. They owe a mortgage loan more than what their property is worth.

Boom buyers are still waiting for a profit. A decade ago, there is a phenomenon known as “the boom”. 16 million families bought homes during this time. They are holding on to their property until prices go up and their investment will return with a profit.

The potential home buyers will have few options for starter and trade-up real estate. But the sellers of premium properties will be waiting longer for a buyer.

You can avoid equity mismatch when you seek the help of a professional. At Burgess Group Realty LLC, we help our clients buy or sell properties on best prices. CALL Catherine at 303.506.5669.

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