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The Housing Market’s Troubling Lack of Move-Up Buyers « The Washington Independent

Jul 31, 2020
As Ryan pointed out, the new figureson March home sales weren’t great — but they weren’t entirely awful, either. A small but growing number of metropolitan areas could be seeing a bottom to the housing market crash.
While that’s encouraging, one trend that Calculated Risk has been writing about for a while now doesn’t seem to be getting any better — the lack of move-up buyers. Those are homeowners who sell their current abode to buy another home, maybe one with a bigger yard, or extra bedroom, or nicer kitchen.
Those buyers aren’t moving up the way they used to. Most of the action in the housing market involves first-time homebuyers and investors snapping up foreclosed homes are fire-sale prices. More expensive homes in the mid to high-priced range aren’t selling nearly as well, meaning the people who own those homes aren’t going anywhere. The usual trajectory of the housing market — a first-time homebuyer settles in, accumulates equity, buys a second and often more expensive house — is interrupted.
CR cites this explanation from The San Francisco Chronicle:
In a normal real estate market, about 80 percent of buyers are “moving up” or “moving across” – people who sell one home before buying another, said Mark Hanson, principal of Walnut Creek’s the Field Check Group, a mortgage consultant. Remaining purchasers are split between first-time buyers and investors.
In today’s market, about half of buyers are first-timers and a third are investors, leaving just 15 percent of what he calls “organic” buyers. Those first-timers and investors all troll for bargain-basement foreclosures – leaving few buyers who are interested in the homes being sold by “Ma and Pa Homeowner.” That, in turn, leaves Ma and Pa unable to move up to a nicer home. “The organic seller is left out in the cold,” he said.
It also could impact supply down the road, when all those pent-up sellers finally decide to put their homes on the market.
If you want to know if and when the housing market is going to recover, it’s useful to also keep a close eye on what happens to move-up buyers. Until they’re moving up, the market probably isn’t going to be picking up anytime soon, either.
Camilo Wood

Camilo Wood

Camilo Wood has over two decades of experience as a writer and journalist, specializing in finance and economics. With a degree in Economics and a background in financial research and analysis, Camilo brings a wealth of knowledge and expertise to his writing. Throughout his career, Camilo has contributed to numerous publications, covering a wide range of topics such as global economic trends, investment strategies, and market analysis. His articles are recognized for their insightful analysis and clear explanations, making complex financial concepts accessible to readers. Camilo's experience includes working in roles related to financial reporting, analysis, and commentary, allowing him to provide readers with accurate and trustworthy information. His dedication to journalistic integrity and commitment to delivering high-quality content make him a trusted voice in the fields of finance and journalism.
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