When the economy tanked and the housing market collapsed, neighborhoods and towns that are considered affluent or wealthy saw a high number of homes go into foreclosure. When the economy started to recover, though, a lot of those same homes stayed vacant, since home prices didn’t change enough to reflect the average incomes.
With vacant homes on the market longer, new problems popped up. How could property owners and banks protect their homes while they were vacant, for example, so that they would be safe until they sold? Is vacant property security a necessity in affluent areas? And perhaps more importantly, why do homes stay unsold, and how can the market recover?
Why Expensive Homes Stay Unsold
When there are lulls in real estate, more people turn to rental properties because it is often cheaper than having a mortgage—and if it’s not the price that’s luring people in, it’s the idea that there is much less responsibility and commitment associated with a lease than there is with a mortgage.
When incomes are not as stable as they once were, people may be reticent to enter into a 20- or 30-year contract for a home, especially considering the toll a foreclosure can take on a person’s credit score.
Expensive homes stay on the market because people may also decide to downsize and purchase a smaller property so that they have a smaller mortgage. Whatever the reasoning for each person, the result of homes being left without owners is a drop in their value over time—and without sufficient vacant property security, the potential for vandalism and damage.
How Do Housing Markets Recover?
There are a number of things that help housing markets bounce back. For example, one thing that helps is, interestingly, a lack of housing inventory. When the housing market is bad, fewer people want to sell their homes. When a buyer is looking, their options are somewhat limited, so they may be more willing to settle for a home that’s “good enough” rather than waiting out the market to find their dream home. The idea that less inventory means more sales seems counterintuitive, but because there’s less inventory available, those sellers are able to fetch higher prices for their homes. Once their homes are sold, they buy new homes as well, and sales continue in a sort of domino effect. Little by little, the market bounces back to what it once was.
