Interesting that you should ask this question now. I've come to believe there are an enormous number of fence-sitters right now. I'm getting few showings at my listings, but my open houses are attracting more lookers than ever before. Even many of the showings are for people "early in the buying process" according to their agents. I believe that many potential buyers are simply waiting for a signal that the recovery remains on track.
We seem to be in a consolidation phase during which the numbers are going sideways. This has resulted in many negative news reports because sideways is not progress. My conclusions are, of course, pure speculation, but I believe we will see considerably more buyers if we get some clearly good news like an upward break in stocks or a downward break in the unemployment numbers.
Prudential Real Estate of the Rockies
It is curious that there are not more folks seizing on these interest rates. I don't agree that there are not fence sitters. As Ron notes, there are plenty of folks looking. Few are buying. There is a positive spin. What if inventory has become so limited in the price range where people are shopping that it's taking longer for them to find something to make an offer on? I've had that difficulty when I've shopped in smaller markets on the perimeter of large metro areas.
Spirit, I read recently that "the rich" are the ones who are walking. It's understandable if they can no longer afford and they bail. An argument can be made for someone who bought a one-million-dollar and now they're panicked that they're going to pay this fantastic sum for something with a value considerably less- in some cases half of what they paid. But, these folks should try negotiating the principal.
These things tend to happen when jumbo loans disappear. Lenders are making jumbo loans again, now. But, that interruption in the flow of money hit the higher end hard. I know of homes that have been pulled off the market by banks waiting for that part of the market to recover.
No question this is a tough market for sellers. But, it is without question a fantastic opportunity for buyers. Tomorrow prices could go lower. But, today mortgage rates are the lowest in 40 years. Which is more important?
Do the math. We should be seeing a flood of buyers based on the level of buying last year when rates were about a point higher.
Have a great August everyone!
Expectations of dropping prices based on historic norms tell the educated buyer to wait awhile longer.
No stimulus is needed except for the best stimulus of all. This particular stimulus always works with a fantastic track record. This stimulus is called "low prices" When they arrive nothing else will matter and buyers will buy. Until then nothing can change the basic economics saying wait to buy.
There is the fear that they will overpay and get stuck later. This may be true only in the short term. The people that got really hurt were the ones that over bought or bought for the short term. Real Estate is a long term investment, not a 2 or 3 year deal.
If another stimulus was enacted (not sure how it will be paid for) I would like to see the funds be available for closing cost. A $4K closing cost package would probably do more good. Cash upfront is king.
The market woke up this winter and it has been charging ahead. Buyers sitting on the fence? Home prices are moving up. Inventory levels are not keeping up. Buyers should take advantage of the low mortgage rates. Marketwatch says rates just edged up to 3.55.
If you like universities towns with an active community, now would seem the perfect time to snatch up a good deal in Boulder.
Ron, I think a great place like Boulder County will be seeing more activity soon. Recovery may be slow. However, the shrewd know to act before the boat starts leaving the dock.
Thanks for your comments.
720 810 0683
To answer your question directly, for the Tucson market I feel when the FED is done buying down the rates, and 30 YR Fixed interest rates start going up, when we see 4%, 5%, 6%, and 7%-many buyers in hindsight will wish they had bought. No way interest rates can stay this low forever.
Home prices are rising, inventory is vanishing.
Only the quick are finding the homes they want.
If you want to buy and you didn't find that dream home, don't give up. New homes start in the 300s and they will be building more.
At some point, it becomes essential to stand, balance, and walk independently.
So, buyers finally get off the fence and start buying. All the available inventory gets snatched up in a hurry because no one is selling unless they have to. That leaves REOs and retirees for the most part placing homes on the market.
Richmond Homes returned to Longmont as did other big builders. Custom home builders are active, too. But it may be some time before anyone is building like the industry once did.
That means buyers will have to think upgrading when they go shopping. It can be a good thing, after all. What woman doesn't want to take an old kitchen and completely remake it with new appliances, top end counter tops and a new floor.
We have noticed a HUGE increase in buyer activity this spring! It seems like there has been a mass exodus from the fences.... and is resulting in a shortage of listings in the Longmont/Berthoud/Loveland areas. The combined low interest rates, adjusted prices and large pool of buyers who now can qualify again to purchase homes despite having short sales in their past has resulting in a huge flurry of activity.
It's been a very exciting spring of 2012!
Neuhaus Real Estate, Inc.
My how things have changed in two years. There are no shortage of buyers now. Offers start coming within a week of listing for homes priced in the 200s and lower.
What seems to be stimulating buyer interest is the shrinking inventory combined with rising rents. Thanks all who responded to this question over the past two years.
You wrote: "There is a positive spin. What if inventory has become so limited in the price range where people are shopping that it's taking longer for them to find something to make an offer on?"
This is an incredibly perceptive idea, at least for Boulder County and perhaps for other areas. It probably is not the entire answer, but I think it can explain some of what I am seeing. Until now, it has been entirely a buyers' market and that is starting to shift in some areas like ours where the inventory of really nice homes is low. Buyers were courted heavily during the worst part of the recession. Some may feel that they are not now getting the kinds of responses and concessions that they expect, so they are holding back. It may be that buyers must adjust their thinking to an evolving reality. In other words, they may need to "get" the idea that this is not as much of a buyers' market as it was a year ago.
I'm sure there are agents elsewhere who are not yet seeing such a shift, but Boulder County (especially the southern and central parts of Boulder County) may be a bellwether because the area has been more economically stable throughout the recession.
Prudential Real Estate of the Rockies
But I suppose there are degrees of slowness. I think the higher end has been the most active part of the market for the Denver region. But, you are right, there is nothing to write home about if you're not writing the business that is happening.
720 810 0683 - boulderSuZ@gmail.com
The one thing I see that makes me cringe is when I read about and hear about "strategic default", encouraging home owners to walk away from their mortgage. If enough people do that, everything could crumble.
There is a general consensus that the economy will not grow a lot through the remainder of the year. That could mean home prices will soften more. Sellers should consider a price cut if they're home has been on the market for a while and they're not getting showings. However, with interest rates low and possibly easing a bit more, it may just take some patience. Buyers traditionally like to make their move when the kids are out of school. So, the coming weeks may give that spark.
Have a great August everyone!
2. They need credit. (no credit cards)
3. They need a down payment.
4. They need job security.
5. They need a lender willing to make a loan
6. The house has to be priced right.
7. They don't need nosy neighbors.
8. They wonder why if everything else is down, why won't the commission rate go down to real estate agents.
9. They need to be able to make the mortgage payment today - and tomorrow.
10. They need a willing seller - not a greedy one.
PS -0 I'm also a landlord with multiple units.
I love it when my tenants plant flowers and take care of the place. EVEN if I GIVE Them flowers, they kill them.
You talk about pride in ownership - well there should be pride in renting - especially if I am providing a very nice family home for someone who can't afford to by a home there.
Just because a person rents doesn't mean they're trash - they may be smarter then then someone who purchased and lost 40% in 3 years of their "investment" - there are plenty of VALID reasons for renting.
It's a great relief no one spoke up for another stimulus. I think the last extension did little except help a lucky group who were going to buy anyway. Now, there may even be would-be buyers who think another tax credit is in store and all they have to do is wait.
There have been a few stories to support a claim that inventory and therefore selection is drying up. However, with new jobs emerging only incrementally and word that buying slowed to a crawl in May, there seems to be no pressure to buy. If you're nervous anyway, then it's easier to play the waiting game even if you're stacked up like cord wood in a rental.
The great points all of you made and my comment:
1. It is still rent vs. own, Joseph. Pride in ownership is still strong. Some renters must be getting antsy playing the waiting the game. I've never liked renting because I would rather be growing flowers and vegetables in my garden and decorating.
2. Certainty in the economy. It's unfortunate for Main Street, Bernanke made his comment. Wall Street and the Fed always seem to be on a different page than the average gal. Certainty is nice, but making out like a bandit is even nicer. Those interest rates may not go lower. As Debbie noted, the best thing that could happen is rates starting to climb. Buyers may get motivated if they see the window of opportunity closing.
3. We do need that spark, Ron. It's difficult for the average consumer to see how a purchase today is the smart thing to do. But, inventory is going to grow smaller and that situation won't improve a lot until builders are building at a level to meet population demand.
Thanks again, everyone. I'm looking forward to August and a vacation in October.
I'm not a fan of the stimulus. I think it artificially propped sales up when the economy needed to begin standing on its own. Home sales and appreciation will recover.
Finally, I like Debbie's comment on rates. That might be the kick that snaps some buyers out of a funk and into action.
We have great prices and rates but it's not enough for some people to take the plunge. They FEAR prices and rates may go even lower! I feel that it's important to live now though. This market has been crazy for several years and it may be like this several more. How long should we wait?
Buyers who are on the fence need to talk to a professional to make sure they can afford a home. That should help with the fear. More information always helps.