A real-life example that epitomizes the struggle of many to move up.
Jaimie Adler said it’s getting cramped in the Lexington, Massachusetts, house she shares with her husband, two daughters and an au pair who occupies the former office. They’d sell, Adler said, if more homes were on the market in the Boston suburb.
Adler is staying put — and she’s not alone. The dearth of residential listings nationwide is now feeding on itself, with homeowners such as Adler reluctant to sell because of the difficulty in finding a place to buy. For others who refinanced into historically low interest rates, the prospect of rising borrowing costs makes selling less appealing.
Adler and her husband, Jeffrey Palter, are planning to expand or rebuild their 1,250-square-foot (116-square-meter) home after talking to an agent about listing it last year. Selling would be too risky, Adler said, because they might get stuck renting an apartment like a friend whose house hunt in the area lasted a year.
“We’ve decided to stay and work with what we have,” said Adler, 42, who runs a public-relations company from her guest bedroom. “We found some bigger homes in the neighborhoods we liked, but they’re more money and they’re still 25 years old, so they need the same amount of work.”
Mark Fleming, chief economist of property-data firm CoreLogic Inc., said the inventory is even tighter than it seems. Some properties are not desirable because they’re in unpopular locations or lack the amenities that buyers want, he said in a report last week.
The “inventory of homes for sale that buyers actually want to purchase is even less than what’s on the market now, and many people who are looking (and qualified) to buy a home are holding off because they can’t find the right one,” Fleming wrote. These “buyers waiting in the wings are the new ‘shadow demand.’”
About half of mortgaged homes have below-market loan rates, Fleming said. Some 3.57 million likely sellers may be discouraged from listing their properties because the cost of financing their next home will be higher, he said.
Adler, the homeowner, said a local builder approached her a few months ago and said his client wanted to buy her house, built in the 1940s, and renovate it.
She and her husband instead decided to improve the house themselves because they like the quiet neighborhood and the area’s schools, she said. Adler said she’d prefer to have at least 2,000 square feet of living space, an open floor plan, a finished basement and a “fantastic kitchen.”
“There are gorgeous homes in this town, but they start at a million dollars,” she said. “It makes more sense to stay and renovate so you get exactly what you want.”
Adler said the chances of her putting her house on the market are minuscule. An agent suggested last year that she list the property for $725,000, she said.
“The only way I would list this house is if I could buy something first,” Adler said. “It would take me inheriting a million dollars to buy something first — or winning the lottery. And I don’t play the lottery.”