High prices: The real culprit in home sales slump

WASHINGTON — A lack of homes for sale gets the blame for the recent slowdown in housing sales — there is less for potential buyers to from which to choose and they aren’t finding what they want — but not every real estate expert believes the slowdown in sales is just because of low inventory.

“I don’t think it’s the inventory. That’s the easy whipping boy in this housing market,” said Daren Blomquist, senior vice president at RealtyTrac. “We’ve seen increasing sales in the midst of low inventory over the last four years.  I think the culprit here is the high prices. This housing recovery has become a victim of its own success,” he said.

RealtyTrac notes that the weakest purchase origination volumes right now are in the super hot markets that are the highest priced across the country.

And something else has slowed dramatically. Refinancing activity is down, despite those low mortgage rates.

The slowdown in refinancing simply could be because rates have been so low for so long.

“We’ve picked the bone completely in terms of refi, and there are really no scraps left in terms of people who haven’t refi’d. And people who have refi’d are at a low enough rate, where even a little bit lower rate isn’t going to make a difference. We have ridden that train as far as it can go,” Blomquist said.

Refinancing volume in the second quarter was down 12 percent from a year earlier, the second consecutive quarter with an annual decrease, according to RealtyTrac.

What is on the rise is originations of home equity lines of credit, or HELOCs, as existing homeowners tap into the equity rising home values create.

HELOC originations were up 5 percent in the second quarter from a year ago, the 17th consecutive quarter with an annual increase.

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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