Inventories are up, prices have eased and interest rates remain near historic lows. Clearly, it's a Buyer's Market. So, why aren't the buyers buying?
In my market, Westport, CT, activity appears to be picking up. Listings are receiving showings and anecdotal evidence indicates that agents are not lacking buyers. Yet, statistics, for the past two months (March and April), show units sales down, to half the pace of a year ago.
Certainly, some buyers are facing real obstacles:
*Their current home may be on the market, but not yet sold
*They may be having trouble arranging financing
Yet, that doesn't explain the whole picture. Clearly, more factors are influencing the market.
The extensive reporting, on the collapse of the housing market, may have led buyers to unrealistic expectations. While the current environment certainly provides an opportunity for buyers to move to communities and/or purchase homes that were previously out of their reach, it does not mean that properties are being given away.
More than once, I've reminded clients that "This is a Buyer's Market, not a Fire Sale". The media has convinced buyers to make really low offers. So even when prices have been significantly reduced, sometimes below market value, I've seen offers come in an additional 10 or 20 percent lower. No matter how low the price, they've been conditioned to believe, they should pay less.
Some buyers are afraid to make a decision, because the market may go lower. While they are trying to "time the market", they may miss out on some truly good buying opportunities. Finding the bottom can only be done in hindsight. By then, the house they wanted will no longer be available and prices of new listings will be higher.
If the house is right and the price reflects market value, the time to buy is now.
The problem is not with inventory.
The problem (one at least) is that lenders are taking a bath right now and have tightened their restrictions...even if you have great credit and a good job money is tougher to get...there are many more hoops to jump through...and probably more to come...
I hope things loosen a bit very soon
"A Quick Note"
www.aquicknote.net
I have found two things. Sellers still don't recognize that it's a buyer's market. Second, buyers think it is more of a buyer's market than it really is. They still want it 50% off.
There will be a price point for every home where it will receive offers. Buyers determine the price - the listing price is just an opinion.
Sure, buyers can be unrealistic. You need to sort them out by getting them pre-approved for financing. Then focus on the sale of REO homes and submit multiple offers. Buyers sometimes need a little experience to understand the market.
I 2nd Adam's comment. I'll add that the elephant in the room is it's actually better for buyer to buy in the beginning of a seller's market. You might miss the bottom by a bit but the potential downside is not as great.
I love your line "This is a Buyer's Market, not a Fire Sale". This is what some of my buyers need to hear.
MArilyn, According to some listing agents it is not a buyers market. So, they are playing hardball. But my real thought is that credit has gotten so much tighter and harder for people to buy.
Shannon- Our inventory is up, but many of those homes have been sitting for months. Well priced listings do sell. I've just seen some buyers, who do have the financing, missing out on homes they like, because they were afraid to "pull the trigger."
Gary - "They still want it 50% off." My point, exactly.
Adam- Certainly, the market determines the price, but when I receive offers $100,000 apart, you've got to wonder.
Roy- Sometimes, they need to lose a few before they understand the market
Joe- Unless, they plan to move in the next few years, if the buyers find the house they love, they should buy now and not wait for the market.
Betty- Intellectually, they may know it, but they still don't believe it.
Jimmy- It's not up to the listing agents to decide that it's not a buyer's market. The market will determine the price. Playing hardball will just hurt their sellers.
Your post is spot on. I am so frustrated with buyers trying to get steals right now. Our market is not dead or even declining at the moment, but buyers seem to think sellers should take a bath. This isn't about lending either. The two worst culprits I have seen lately were cash offers. The cash buyer seems to think the fact that they are offering cash means the seller should reduce 10% or more. That is not going to happen on a house that is priced correctly here.
Brenda- How right you are. In reality. from the sellers' perspective, all deals are cash deals. The mortgage details are between the buyer and the lender.
It's true that a cash offer eliminates the mortgage contingency. However, if a buyer has financing in place and the home is in no danger of not appraising, then there is no reason to accept a lower offer, because it is from a "cash" buyer.
In my market (Phoenix area) the logjam appears to be breaking... nothing like multible offers to turn buyers into serious bidders.
Chuck- Hopefully, that trend is contagious.