Are ‘Move Up’ Buyers Starting to Feel Trapped?

Impending Move-up Home Buyers ...
are Mostly Sitting on the Fence

The Los Angeles Times reported that a majority of home owners who wish to move up to a larger home are putting the desires on hold, feeling stuck in a listless housing market plus the evaporating equity in their present home.

"Impending move-up home buyers ... are mostly sitting on the fence of today's market, leaving a key factor of the U.S. housing market jammed in park," The Los Angeles Times' commentary notes. "The pledge of increasing prices and move up mobility, at one time a powerful influence in the U.S. housing story, has been nearly eliminated by the economic recession."

Move-up home buyers are often categorized as prospective home buyers looking for homes priced in the in the $300,000 to $800,000 range, The DataQuick, a research company concurs that home sold dropped the greatest in that range in June, going down 25.5 percent from last June of 2010, concurs DataQuick. On the other side of the coin, sales of homes in the under $200,000 category fell 11.4 percent from last June 2010 while homes sold priced over $800,000 dropped 17.6 percent.

The "home move-up" class creates a sequence of home buyers and home sellers which is necessary for a robust real estate market, as moving up "creates price increases and assists home owners in building equity in their homes," The Los Angeles Times' piece states.

One way to think of it as a sequence of exchanges that normally happen, and if that sequence is broken along any position, or it doesn't even start because there aren't enough entry-level home buyers, then the entire dynamics of the housing market is adversely affected reducing the level of home resales

Source: “Home Owners Who Want to Trade Up Are Stuck Waiting,” The Los Angeles Times (Aug. 1, 2011)

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