What's motivating them? Not price, but the pursuit of a "good deal." Overlaid, in some cases, with a veneer of greed. With just a hint, in some cases, of a sense of entitlement.
I don't mean to by cynical, and there are plenty of rational buyers out there. And they're motivated by the same things they always were. Basically, they want a better home. Maybe they've outgrown the one they're in. Or they've saved up enough to "trade up."
Then, of course, there are always the buyers who have to sell and buy because they're relocating. And the buyers who are retiring and downsizing.
And really, that's the large bulk. They're trying to find a home that best meets their current needs.
But I am concerned with the growing number (probably still small, percentage-wise) of buyers who are looking for what they think is the next great deal. Or the buyers with a 550 credit score who feel they're entitled to buy a home. (I do provide them advice on what to do, but it sure isn't just to march down to your local mortgage broker with that score in hand.) Or the folks who are upside down and are aiming for a "strategic foreclosure" just to wipe out some debt.
Interest rates? No. People look at monthly payments, not interest rates. Perhaps they should look at the rates--they can't stay at this low level for too much longer. But they're not. I'd bet that if interest-only loans magically reappeared tomorrow, the lenders would be overwhelmed with applications.
Prices bottoming out? Maybe that's a slight influence. Kind of the lemming behavior--jump on the bandwagon (to mix metaphores) before it's too late. Still, as a real estate investor (as well as a Realtor) I constantly see great deals. And I see good deals turned into very good ones with some good negotiation. A lot of today's buyers are missing those entirely.
Tax credit? I wonder how many homes really purchased with the tax credit made good economic sense, and resulted in a good fit for the buyers. I think many buyers were in search of that elusive "great deal" and figured the tax credit would make an average price on an average home transform into a great deal. I'd love to revisit some of those buyers a year or two from now--once they've bought that big-screen TV with their tax refund and they're in a home they don't especially like. Sorry: Cynicism resurfaces.
No, in most cases what's motivating most of today's buyers is what's motivated them in the past--just trying to get the best housing fit for them and their families.
In the time that you've been a "buyer," Dan, a trillion jillion people have bought homes. For better or for worse.
- The risk/reward ratio appears to benefit those who wait awhile longer.
And, those who wait long enough die renters.
Look. I don't care, one way or the other. You pays your money, and you takes your choice. But even though prices in some areas are at 2003 levels, the fact of the matter is - had the market stayed flat, those home buyers are seven years into home ownership, going on with their lives, rather than watching the market every day waiting for the "right time" to buy.
Everything doesn't work for everybody. Whenever "Now" is, it's a good time for some people to buy, and a bad time for others to buy. And it doesn't always work out, either.
You're betting that prices will be lower in 18 months, and you're satisfied renting until then. Fine. Only time will tell as to whether that works out.
Personally, I'd rather buy now. And both of us might turn out to be wrong!
What is motivating many of my buyers is the need to raise their family in a permanent setting. People have been buying and selling homes for 100's of years and they do so for permanence. The tax credit, low rates, low prices are nice features, but not the benefits of buying. I am busier with the credit over then I was with the credit on going. All the Best. Tom
â€œThis chart shows you it isnâ€™t over yet,â€
That is what motivates me. Plain, simple, straight forward with no spin.
Affordability is still the lowest it's been since the 1970s. Interest rates are still amazingly low. And now, that the economic news is sounding better, that thick feeling of fear seems to be dissipating.
I have some illustrative charts I can send to you if you want to contact me directly.
I am no exception to that. There was a time I would have taken out a 30 year mortgage and bought a house that way. The bubble made that impossible. I tried. I was $15k short. I saved money, increased income a little, and I got further and further away from being able to buy a house. I got ahead $10k and prices went up $15k. I could afford $25k more and prices went up $40k. The further ahead I got and the more I could afford the further behind I became regarding house buying.
Not completely discouraged I kept saving for a house. Suddenly I saw prices stop going up. They actually started to drop some. I watched as prices still were out of reach. What happened? They came down even more. I had no idea why. I could not understand it. I kept seeing prices go lower. I kept seeing my bank account get fuller (nice that way).
I am still seeing lower prices. I am seeing interest rates that will have to increase before to much longer. I can see how high unemployment is going to make getting a big raise almost impossible. I have seen tightening lending standards. I see how bad loans will be resetting and creating more foreclosures and thus even lower prices. 4 million this year according to trulia. Why would I buy today only to see prices much lower within 18 months? Why would I throw money away knowing lower prices are coming? Why would I not be patient and apply the lessons I learned during the bubble?
Millions more people are like me. They could not buy in the bubble and see the reasons to wait. patience learned during that time says waiting 1-2 more years is not that long really. The risk/reward ratio appears to benefit those who wait awhile longer.
I agree with the general thread, traditional motivations are back. A good house in a good neighborhood, at a fair deal, within the stated budget for the average buyer. Flippers want to steal something, but that's the case in any market. The tax credit was icing on the cake, but most of my buyers weren't going to just buy anything because of a deadline.
I think the market here in the greater Puget Sound area has leveled off and some pockets are seeing price increases.
If rates start to climb, there will be a rush to secure our current sub 5% opportunities.
Associate Broker, ABR,GRI,CRS,CRB
John L. Scott
Back in the '70s, people were willing to take on 18% mortgages to buy homes. Heck, in China - you know, the place where they rounded up all the landowners and "intellectuals" - in China, people are going crazy trying to buy their own homes.
The financial aspect is only a part of it. More than anything else, it represents commitment - the commitment of the local economy that our buyer is going to continue to have a good paying job, and the commitment of our buyer to putting down roots.
Tom and Joanne were right when they said people want a sense of permanance in their lives. There are some great deals out there coupled with low interest rates. I've got several for your Buyers. Bring them by!
The Linnerooth Team