Owners Hold Off On Sales Of Homes

"So, we said, fine, let's take the leap, and so we put our house and the market and within a week it sold," Michalisko said.

The couple then bid for a townhouse just like the one they had tried for earlier. Again, they lost the bidding.

The person who wanted to buy their condo offered to rent it back to them while they continued to search, but only at "about twice as much as our mortgage payment," Michalisko said.

With that, the couple canceled the sale and took the condo off the market.

"There's nothing that entices us to get back in the market now," Michalisko said. "It's just too limited. . . . It's a kind of paralysis."

It is not just the rising prices that are a problem, Silver Spring resident Kelly said, it is the lack of choice.

"A neighbor told me recently that he's looking to sell in the $600s, and we only bought in the $200s range four years ago. . . . But I've been looking at more expensive neighborhoods where I thought I'd be able to move and there's nothing there," he said.

Of course, homeowner nervousness about losing this game of real estate musical chairs is not the only reason for tight inventory. Demand to buy homes continues to be strong. Nationally, low interest rates have propped up sales rates. Locally, exceptionally strong job growth means a steady flow of new residents who want to buy.

"You will hear a lot of conversations at dinner parties and on the street that suggest that it is impossible" to buy a house here, said Ruth Dickey, manager of the Long & Foster's Bethesda Gateway office. "But in the real world that's not the way it is. Buyers are fearful, but they're doing it."

In hot markets such as the Washington region, shortages are exacerbated by those holding out for even bigger profits, said Lawrence Yun, an economist with the Realtors' association. "Because house prices are still rising, people are just saying, 'Why not wait it out a few more months and we can get even more money,' " Yun said.

Those rising prices are one reason Denise Parietti said she and husband, Jim Marketos, have been "absolutely afraid" to put their Georgetown house on the market, even though they have finally won a bidding war on another house after losing out on five others.

"We figured the house would sell, all the houses are selling," Parietti said. "But if we sold it before we bought another house, we weren't sure we would get enough money" to win the next bidding war, she said.