Home sellers by now are bombarded with marketing materials asking them to sell their house in the wake of the inventory shortage. They might want to sell to tap into that equity, but they aren’t. Below I propose a theory of why they are not motivated to sell which pertains indirectly to the mortgage meltdown of 2007.

Where will they go? Sellers might have purchased 10 years back and they could be sitting on $400,000+ of equity. The only problem is: what can that $400,000 buy as their replacement home? Despite our recovery from the mortgage meltdown, the meltdown has permanently hampered the surplus income of many working families who lost equity in the 2008 crash. Despite them sitting on a large equity position, the rising values make their future housing less affordable. They may be able to purchase by using the equity as a down payment, but retirees with fixed incomes will not be allotted as much purchasing power as those with dual incomes.