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Is fear trumping hope in this real estate market?

Posted by Scott Van Voorhis September 18, 2012 07:04 AM

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If you are staying put this fall, you are not alone.

In fact, you are part of a growing trend that threatens to lock down the real estate market, on both the buy and rent side.

For home buyers, dwindling inventory has already become a major issue and is only getting worse. Buyers too often are forced to battle it out in multiple bid situations for the few half decent, well-priced homes out there.

Now renters hunting for new digs are running into the same problem as well, with not much to look at.

Real estate broker Dana Whiddon told me she has only three apartments in Arlington to show renters instead of the typical eight or nine. It's a story repeated by other agents who specialize in apartments.

The vacancy rate for apartments along the 128 beltway, for example, has dropped below 3 percent, an extremely tight level.

"I have a lot of people looking and not much to show them," she said.

Basically, as rents continue to soar, a significant number of renters are opting to renew and stay in place rather than risk getting hammered with a big rent increase for a new place.

There is a similar dynamic at play in the home sales side of the market, with sellers also not seeing the kind of incentives needed to make them way to move.

And of course, that means home prices. Yes, the declines are leveling off, but we are not seeing the kind of appreciation yet, except in some of the more upscale towns, that would tempt sellers to list their homes.

However, maybe even just as crucial is the unsettled economic and political environment.

There's still the simmering European debt crisis, not to mention the looming fiscal cliff, ready to greet whoever wins the White House this November.

Topping it all is an economic recovery that still feels like a recession to most people.

During uncertain times, people tend to hunker down. Right now, though, all that hunkering down could wind up killing the real estate recovery, such as it is, before it gets off the ground.

For a country has always liked to move around a lot, it is definitely a strange state of affairs.


This blog is not written or edited by Boston.com or the Boston Globe.
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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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