According to Helen Hanna Casey – president of Howard Hanna Real Estate Services, serving markets in Michigan, New York, Ohio, Pennsylvania and West Virginia – “Positive equity has been increasing for several years throughout our markets. The pricing increases have been caused by many factors including an improved economy, decreases in refinancing at over-inflated prices, pent-up demand, lack of inventory and low interest rates.”
Casey reports that most move-up buyers in her markets are actually buying before they sell their existing home in order to take advantage of low rates. In order to facilitate this trend, Howard Hanna introduced the “Buy Before You Sell” program. As Casey states, “We are so sure of the increased equity that we are advancing the equity so they can move ahead. This should also begin to add more available homes to the market. Unfortunately, with so few homes available, move-up buyers are struggling to find the home of their dreams. We are also beginning to see an increase in new construction specs. This always helps push the market.”
While the evidence that the increase in positive equity is sparking homeowners to list their homes and move-up is still anecdotal to some degree, brokers believe this trend could soon ease the current housing inventory shortage in most markets.
“There probably aren’t any statistics to show how many people gained positive equity and then listed their home to purchase another one,” says Liniger. “But we may be starting to see an impact on the low inventory situation. Inventories have been dropping for several months, but now we’re starting to see those drops becoming smaller and smaller. It’s very likely that we’ll soon see the inventories turn around and start rising.”