Trading up homes can be difficult in today’s housing market

by Anna Sobrevinas24 May 2017
High prices and low housing inventory have been hindering homeowners from getting out of their starter homes, according to a new report from realtor.com.

The shortage of homes for sale has helped homeowners selling their homes command high prices, but the same ‘perks’ have made it more difficult for them to move on to a home of their preference.

"In today’s competitive landscape, moving up from [starter homes] to the white picket fence has become increasingly tough," said Javier Vivas, manager of the realtor.com economic research team. "This isn't particularly unhealthy for the market, since it stops some irrational buyers. But it can leave out a large crowd of buyers who are financially ready."

The traditional type of trading up – moving to a bigger, more beautiful and more expensive home – has been performing badly, as only 42% of buyers have gone back to the market in 2015 compared with 55% in 2003, according to the National Association of Realtors.

Meanwhile, repeat buyers, such as those trading up or moving to smaller but more elegant homes, have decreased from 1.8 million in 2001 to 1 million in 2016, according to the Urban Institute.
The decline in repeat buyers is driven largely by factors like new home construction not keeping up with demand, competition from foreign investors and the slow home equity recovery.


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