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Competition for listings may be due to buyers' age

CAMBRIDGE, Mass. – Sept. 24, 2015 – A listing shortage continues to plague many housing markets. For 37 months, a seller’s market has reigned, defined as one with less than a six months’ supply of homes listed for sale. As a result, buyers find steep competition in some markets along with higher prices.
Why such a tight inventory of homes for sale? Experts cite many culprits: owners stuck in homes because they’re underwater on the mortgage; a still-high volume of homes in the foreclosure process not yet on the market; a lack of new-home construction; and the amount of single-family units that have been turned into rentals, according to Harvard University Joint Center for Housing Studies’ Housing Perspectives blog.
But the JCHS blog highlights that one big culprit not often discussed: demographics.
“The ongoing generational shift among American households has slowed sales in the short run and is likely to continue to dampen sales over the next two decades,” according to the blog.
Over the last decade, members of Generation X – those now in the 30- and 40-year old age group – have replaced the large baby boom generation, and the Gen X population is much smaller. In fact, among this 35- to 39-year-old age group, the population in 2013 was 9.3 percent smaller than it was a decade ago, with 10.4 percent less households.
As a result, the homeownership rate has dropped considerably, particularly among 35- to 44-year-olds. Homeownership rates among Gen Xers – particularly those in their 30s and 40s – are the most significantly below 20-year historical rates for other similarly aged adults.
“Traditionally, the 30s and 40s are key ages for housing market activity – particularly for trade-up and new home purchases,” the JCHS blog notes. “Indeed, homeowners aged 35-44 historically make up the majority of trade-up buyers. Fewer current homeowners in this key age group has meant fewer potential trade-up buyers and sellers, meaning fewer people putting their homes on the market.”
And that creates a tight listing inventory.
Source: “Where Are All the Homes? Demographic Underpinnings of the Lack of For-Sale Inventory,” Harvard University’s Joint Center for Housing Studies’ Housing Perspectives Blog (Sept. 18, 2015)
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Source: Florida Realtors Feed

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