I've been finishing up my latest Current Market Conditions report, and was a little surprised that the total inventory of single family homes listed for sale in the Sullivan MLS is actually up 11% over last year. Surprised, because in the market segment I focus on (mid range second home buyers from the city), inventory has been really tight over the past couple of months.
The most common requests I get are from buyers looking for authentic charmers (farmhouse/cottage) on a few acres priced between $250,000 and $300,000, lakefront houses in the $300,000 range and 'cabins in the woods' between $150,000 and $200,000. I've been singing this song for most of the year, but the situation is worse because so few new listings came to market during the fall. For example, there hasn't been a new listing for a direct lakefront house on a motorboat lake here under $500,000 since July, and only a handful on non-motorboat lakes. The end of summer is traditionally the time when lake houses are listed, and this year there were almost none. I have a client who's been looking for a lakefront house on Swinging Bridge since September, and there's been nothing to show him.
So what's up? I think there are a few factors at play. Some prospective sellers just aren't happy with what they're hearing from brokers about the likely market price for their house. A lot of the better agents in the county have been more 'tough love' on price, and turning down grossly overpriced listings. Other sellers decided to hold off pending the outcome of the casino referendum, in the hopes that their houses will be worth vastly more next year than this year. (MOre? Possibly. Vastly more? Questionable.) Then there are owners who bought houses near the peak, who are underwater on their mortgages. Banks have gotten tougher about approving short sales, and are less willing to forgive the entire shortfall for sellers with other assets. So many of these sellers are waiting for the market to 'catch up'.
So there's no single factor that's responsible for the inventory squeeze in the second home mid market. Traditionally, inventory doesn't start recharging until spring, but hopefully this year it will pick up over the winter. I expect that asking prices will be higher and it may take some time before buyers and sellers reach a new price equilibrium.