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Housing inventory shrinking as potential sellers hesitate

By Allen Norwood
Allen Norwood
Allen Norwood writes on Home design, do-it-yourself and real estate for The Charlotte Observer. His column appears each Saturday.

Realtors are buzzing about the “lack of inventory” in the local housing market, which is their way of saying that there aren’t enough houses for them to list, show and sell.

They’re citing the numbers, and they’re correct. In February, according to Carolina Multiple Listing Services, the MLS offered a 5-month supply of homes – down from 9.3 months for the same month in 2012. That’s a drop of more than 40 percent in a year.

For potential sellers, though, the impact is not statistical but psychological.

They’re letting the perfect stand in the way of the pretty good, according to veteran broker Dan Cottingham of Cottingham Chalk Hayes.

Potential sellers not only want to get top dollar, he said, but also want to have lots of choices when they go shopping for another home. They look around, don’t see many choices because of the lack of inventory, and they decide to keep their homes off the market. So the sellers around the corner or across town have fewer choices, and they decide to keep their homes off the market, too.

If it sounds roundabout, well, it is. Even if they sell, they might not be able to find that next home that fits their needs.

“That’s the biggie,” Cottingham said. “I’ve sold. ... Now what do I do?”

That question looms especially large because the recession has changed the behavior of home sellers, just as it has changed the behavior of financial investors.

All of us who have sold homes have taken risk. We’ve made the decision to sell without knowing the precise answers to all those obvious questions that follow. We’ve decided, “Hey, we’ll figure it out.”

These days, investors want guaranteed returns, and many sellers demand a degree of certainty that they wouldn’t expect in a healthier economy.

In sellers’ defense, the market is not behaving as you’d expect. Prices are lagging well behind sales, despite declining supply.

Sales are up. Cottingham’s firm did three times the business in February that it did for the same month in 2011. Across the entire MLS, closings were up more than 26 percent in February from the same month last year – but the median sale price was up only 3.8 percent.

Is this the perfect time to sell? Well, no, it never is.

The supply of homes will go up, along with prices. But then, so will interest rates.

If you’re considering selling, Cottingham suggests asking yourself these questions:

Do you need more space because you have a new child or less space because you’ve become an empty nester? Are you selling to accept a job opportunity? Want to swap yard work for travel? “Is there something that gives you a little extra nudge?” Cottingham said. “Then it’s a pretty good time to sell.”

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