You might think that you know what is stopping buyers today from closing on homes they desperately want. After all, isn’t it a blazing-hot sellers’ market? Aren’t home prices through the roof? Aren’t they all bidding against each other and finding out they can’t buy anything without plenty of cash and a willingness to forego inspections and most (if not all) contingency clauses?
Well, yes, there is that. But there is something far simpler at work as well. American homebuyers are finding themselves stopped cold long before closing because the individuals who own the properties those buyers want so badly just don’t want to sell. In fact, barely one in 10 homeowners in possession of attractive single-family residential properties say they are considering selling in the next 18 months – if they are over 60 at least. Unfortunately for today’s wishful, would-be homeowners, most of today’s potential sellers are 60 years of age or edging toward that number. That means most of them are not seriously considering selling in 2022 or 2023.
For younger buyers ready to start families or settle down in homes of their own, this is really bad news. You can’t even make an offer (at least, not if you’re a traditional buyer vs. a real estate investor!) on a property that is not on the market! How are these households who are tired of renting and, in many cases, ready to move out of their parents’ basements where they took shelter during the early days of the COVID-19 pandemic, going to access the housing they are so ready to purchase?
According to Insurtech platform Matic’s latest “State of Homeownership Report” released at the end of January 2022, the answer is that many people who want to buy homes will consider other alternatives. About one in 10 say they will consider renting (this subsection is not renting already). About one in six say they will live in “alternative housing” like an RV, van, or tiny home. Not surprisingly, most of the renters say they will continue to rent, although many say they are reprioritizing location in hopes of getting more for their money or even getting a chance to put in a viable bid on a home of their own.
“This trend of risk aversion and lack of desire for change among senior homeowners is not new,” wrote Matic analysts. “Based on survey results, these homeownership trends will likely continue into 2022.”