Collins: Why aren’t more homeowners selling?
Single-family homes in San Jose are pictured in this file photo.

    Santa Clara County saw one of the hottest housing markets in a decade last year, but 2022 has started out with some of the lowest available inventory ever. This month, we will be taking a dive into the reasons that homeowners are not selling and why turning over housing stock is critical to maintaining vibrant neighborhoods.

    There are several reasons why sellers are staying in their homes longer than ever before. The first one is probably the most obvious: if you sold your house tomorrow, where would you go and what could you afford?

    The appreciation in value that homes have experienced is a double-edged sword. On one hand, you can sell your existing house for top dollar. On the other, unless you leave the area, you will be forced to compete with fellow homebuyers that are all-too-often making an offer above the listing price in the hopes of winning the bid for their next dream home in this highly competitive market. According to a recent survey from the California Association of Realtors, nearly one-third of all sellers are considering leaving California, altogether.

    Fig 1. Table of location of seller’s new home, 2021 Annual Housing Market Survey, provided by California Association of Realtors.

    Capital gains is another daunting hurdle to overcome. If you have lived in your home for several years, it is very likely that your house has appreciated significantly. You are responsible for the tax liability of the gains from your original purchase price.

    Another barrier for sellers is the increased property taxes if they choose to move to a new home, especially if they stay in the area. We also have homeowners that have really fallen in love with the record low interest rates we experienced last year. We are expecting interest rates to rise significantly this year, even though they will be substantially less than historical averages.

    In 2000, the typical homeowner moved every seven years. Today, homeowners stay in their property for an average of 11 years.

    Why is that significant? For one, that means fewer available opportunities for first-time homebuyers. We also need to keep in mind how old our housing stock is, especially our single-family homes.

    Most single-family homes were built over 50 years ago and require a tremendous investment to maintain due to wear and tear over the years. A significant amount of maintenance and upgrades usually occurs as the property is prepared for listing. Fresh paint and new landscaping is essential to providing that enticing curb appeal. And when a new family moves in, they also tend to make additional upgrades and enhancements as they personalize their new home.

    This cycle of fixing up homes as sellers prepare to sell and new homeowners move in creates vibrant neighborhoods.

    San José Spotlight columnist Neil Collins is CEO of the Santa Clara County Association of Realtors, a trade association representing more than 6,000 real estate professionals in Santa Clara County and surrounding areas. His column appears every fourth Thursday of the month. Contact Neil at [email protected] or follow @neilvcollins on Twitter.

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