What's Really Behind Less Home Inventory?

There is no surprise across the nation that the inventory of the number of Atlanta homes for sale is down considerably. While many in real estate are rejoicing in the streets over this supposed sign of recovery, they are not allowing themselves to consider why this has really happened. It is not an anomaly, and it does not mean that the lack of inventory bodes well for the near future of Atlanta real estate. For those that are informed, there is an acknowledgement that Atlanta home buying patterns are being refined and will not return to what many in real estate are expecting. We may not see things return to the way they were for quite some time...if at all.

First of all there are many reasons why there are fewer Atlanta homes for sale for sale. Here are just a few:

• Foreclosures: There is a much higher shadow inventory of already foreclosed homes that are on the sidelines because if they were all on the market at the same time - home prices would collapse. The Federal government has introduced neighborhood price stabilization plans to prop up the values of homes - to protect the banks from failure.
• No Equity: Homeowners have refinanced their homes and there is no equity for them to sell and move up or trade down.
• Negative Equity: Homeowners have refinanced their Atlanta homes and effectively re-affirmed bad debt. They have refinanced for more than the home is worth (125%), and they still have negative equity in neighborhoods were prices are declining. This pool of buyers is locked out of the real estate market until home values rise once more.
• Unemployment: Underemployment and those that fear they may soon be unemployed are not in the home buying frame of mind. These buyers are locked psychologically out of the market until jobs are created and unemployment has gone back to normal levels. Full employment as we were used to is not expected again for another 10 years. The real unemplyment rate nationally is estimated at over 16-17%.
• First time buyers - the pool of buyers has been exhausted. The concept is too narrow in focus and limited in scope to really work.
• There are no buyers: and Atlanta home sellers have resigned themselves to the fact that trying to sell a home in this current market is suicide. Sellers have taken their home off the market in hopes that some future date many be more advantageous for them to sell their home on their terms. (If buyers are not coming into the market in droves with historic 30 year fixed rate loans are available with tax credits - we're in big trouble!)
• Real estate speculators and flippers have gotten a reality check - they cannot sell in this current market and break even. Fewer seasoned investors are entering the market - many have opted to rent their properties.
• Lease Purchase Agreements: Many desperate Atlanta home sellers think they have an opportunity in lease purchase. They do not, since it has been my experience that over 95% of all lease purchases will never close. That applies even more in this current market - bad or damaged credit will have an even rougher time obtaining a mortgage in the coming years.
• Poor advice from Realtors: The markets in the past few years have been inundated with many new Atlanta real estate agents that have no experience to draw on. They are offering advice that is not sound, and the sellers and buyers are following it. This plethora of new Atlanta real estate agents during our Atlanta real estate bubble has added a hugh dysfunctional component into this current real estate market. Homes are still selling, and many sellers are still in positive equity positions.

• Rentals: - Homeowners that have rearranged the deck chairs on the Titanic have decided that they will rent their homes until times improve.