When home values started dropping in 2007, a lot of homeowners panicked and immediately began putting their houses on the national and Santa Cruz real estate markets. The supply of homes for sale rose to a staggering amount and prices dropped lower, fueling more homeowners to “get out while they still could.” However, as 2009 rolled to a close, a new trend that may mean a calming of the panicked markets began.
Meet the Nesters
During the real estate boom, house flippers popped up from everywhere. In fact, flipping houses became such a big industry that cable channel A&E began producing “Flip This House” for those who wanted to try it themselves. Houses had become financial investments, a way to build equity or even immediate cash. However, as prices dropped for national and Santa Cruz real estate, investors found their investments failing.
So, if you can’t build equity, you can’t invest and you can’t flip homes, what good are they? Ask the "nesters," who’ve decided that a home is something to hold on to and a good investment anyway.
2009 showed a 20% increase in the first three quarters for home construction according to NAHB (National Association of Home Builders), and another 8.7% increase in the last quarter of the year. The amount spent on remodeling in 2009 hit $114 billion by October. What are these nesters doing?
While some paying for remodeling are trying to raise the quality of their home to sell it, most are fixing it up to live in. Most people move to get more space, but these nesters would rather expand the place they live in than buy a new home. As well, many contractors believe the number of home improvement bids have gone up thanks to the $1,500 energy tax credit for raising the energy efficiency of a home.
Whatever the reason, the rise in nesters may mean an evening out of the housing supply. Although the national and Santa Cruz real estate markets may not stabilize immediately, a drop in the number of homes hitting those markets could make all the difference in a housing recovery.
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Flip This House
National Association of Home Builders
$1,500 energy tax credit