The super-charged local real estate market that has sent home prices soaring is increasingly leaving prospective sellers hesitant to put their homes on the market, believing they cannot find an affordable move-up house, according to real estate agents.
That, in turn, is translating to a tighter supply of homes for sale.
"This is a fear of being homeless and not finding anything, which is a well-founded fear," said Ron Sitrin, a Long & Foster Real Estate Inc. agent in the District. "But the more a potential move-up buyer is afraid to put his home on the market, the more difficulty people will have finding homes. It's a giant Catch-22."
Traditionally, home ownership has been about trading up. People bought a starter house and lived there for a while. Then, as their families grew or their incomes rose, they moved to a bigger house or a tonier neighborhood. But the hot local real estate market is disrupting that pattern.
For example, Dan and Pamela Kelly live in a small but nice two-story house in a woodsy neighborhood in Silver Spring. They have no doubt they could sell it in a heartbeat, and for a handsome profit.
But the couple say they are afraid to put the property up for sale, even though they would love to move to a bigger place. "While I could sell it, I don't think there's anything I could afford to buy," said Dan Kelly, a restaurant employee recruiter.
Denise Champion, an agent with Long & Foster's Chevy Chase office, agrees. "Probably that describes half the sellers out there, that they're afraid to sell," she said.
Nationally and locally, statistics show that the inventory of homes for sale is at or near record lows. The National Association of Realtors last week reported that existing home sales in March were the third-highest on record, at a seasonally adjusted rate of 6.89 million sales per year, while the inventory of such homes for resale fell to a near-record low of 2.33 million, or about a four-month supply.
Historically, "you need about a six-months supply" to keep sellers and buyers in equilibrium, said Walter Molony, an association spokesman.
Locally, things are even tighter. For example, Fred Kendrick and Peter Clute, agents in the Coldwell Banker Residential Brokerage in Georgetown who have long tracked D.C. inventory, this month reported that the supply of single-family homes for sale in the District in March was at its third lowest rate in 14 years, at about 1.12 months. Condominiums and co-ops were in even shorter supply, enough for 0.88 months.
Real estate agent associations in Maryland and Virginia are also reporting record or near-record thin inventories.
Tom Michalisko knows his Alexandria condo would sell in a snap, but he and his partner are not putting it on the market. They tried to buy a townhouse in late January, but their offer was rejected because it was contingent on selling their own home. Such contract language, once routine, is not acceptable to most sellers these days, agents said.
