Since my fellow Realtors are all posting this question, I'll re-post my answer as to why people aren't buying:
I'm a Realtor, and I'll admit I'm baffled by the comments by most of my fellow Realtors. Read Betty's comments [on the original thread]: They're real world. That's why many aren't buying. Read Jess' comments [on the original thread]: Those are your buyers, and those are the criteria they're using.
To answer another poster's question/comment: Are the prices really good? No. They're better than they were two years ago. But just because a house sold for $515,000 two years ago doesn't make it a bargain today at $325,000. Just because a townhouse sold two years ago for $280,000 doesn't make it a bargain today at $140,000. Those are real world examples from Northern Virginia today (Annandale and Woodbridge, for those who know the area). The $325,000 property is still a dump, just 2 years older and more battered than at the peak of the bubble. The $140,000 townhouse is one of more than 2 dozen properties for sale, virtually all short sales and foreclosures, where the going price now is $95,000-$110,000. So: Cheaper, yes. A bargain: No.
And let's knock down this complaining about the media. Granted, they like to sensationalize. But the media aren't the cause of the foreclosures and short sales. The media didn't pull Wall Street's strings to come up with all the "clever" financing that led to the lending debacle. The media weren't out showing $500,000 properties to janitors, gardeners, and maids who--hardworking as they are--were earning the minimum wage. The media weren't lending billions of dollars to file clerks who used stated income loans to get $500,000 mortgages. The media weren't pushing 100% financing with firsts and seconds at 12% or 14% to people, telling them that there'd be no problem refinancing in a few months.
Meanwhile, let's look at the broader picture. The media aren't behind unemployment jumping half a percent just this past month. The media aren't behind $4 a gallon gasoline and $5 a gallon diesel. The media didn't get us into Iraq and the trillions of dollars that's costing us. The media aren't behind the multiple airline failures. The media aren't behind the shortages in our supermarkets of rice and corn and the huge increases in bread and milk prices.
So let's stop blaming the media. Today's potential real estate buyers know better.
Sure, if buyers wait too long, the market will shift upward. So what? I've run comps for a couple of people on properties in Northern Virginia. (Woodbridge area) Prices are dropping there by $8,000-$10,000 a month. They have been since last fall. Consider the typical buyer's analysis: I wait 6 months to buy. Worst case scenario: Prices decline another $60,000. Best case scenario. Prices flatten out over the next couple of months, then begin rising (though not at $10,000 a month). So best case: Prices in 6 months might be $10,000-$20,000 higher than today. Hmmm. Let's see. Downside risk of $60,000. Upside risk of $20,000. Most likely scenario: Prices will be lower by another $20,000 or so. Buyers may not have all the facts that Realtors have, but they're not that dumb. If they wait, prices likely will go lower...maybe much lower. And if they're wrong, they're still buying near the bottom.
Interest rates? Yes, they may go up a bit. But they'll still be just fine in 6 months. It sue doesn't look like the economy is going to get so overheated in the next few months that the Fed is going to slam on the brakes.
Buyers and sellers aren't snoozing. Far from it.
Frankly, there are other good Realtors out there with similar perspectives on the economy. But it's not politically correct to voice them. So that's why most of the comments to this and similar postings from Realtors are likely to be along the lines of the question: "It's a great time to buy." For some, it is. For the large majority of the population, the future isn't as rosy.
As for Matthew's comments that the Northeastern states haven't taken hits like Florida, it's true that all markets are local. Still, my examples above are indicators that we have taken hits. I can show you condos (Shadowood in Reston, for those curious) that sold at the top of the bubble for $300,000 that are now on the market for $130,000. Or areas in Prince Georges County in Maryland. Or areas in Loudoun County in Virginia.
Would one of you Realtors PLEASE send me that NAR memo?
Judging from your last post, you obviously understand your market; and it's always best when RE agents give sellers and buyers straight talk.
We have a few agents in this area that could take a cue from you and be honest with sellers and buyers.
Good Luck sir.
Furthermore, what appears to be a fair valuation is relative. I suggest looking at growth rates from 1993-2000 and then take that ratio and overlay that percentage through 2000 to the present and you will be able to make reasonable projections of fair valuations. When the valuations are fair, buyers with resources will make offers.
sellers, appraisers, and a lot of seller agents haven't gotten the memo yet...to their own detriment.
Matthew i think you will agree with the tremendous amount of inventory out in the market today there are some phenomenal deals to be had and there are magnificent homes for sale that are 50 cents or more below (high time levels). however the real estate market in orlando has father to go before we see a true bottom. when that day happens we will see a number of significant sales simply because "no one wants to be the first sheep in the pen".
until that time comes i would appreciate if you wouldn't give away the best kept secrets in florida and let me pick and choose the best real estate in Orlando when i want to choose it.
I do not have buyers who want to buy, but cannot. I have capable buyers, with prequal in hand, or pre-approval subject only to property appraisal, who choose not to buy.
They choose not to buy because they suspect the market may go down, or they are afraid to make a mistake. Sometimes, too many choices and too much info leads to a state of paralysis.
Our buyers are afraid to make a mistake, but they really want to buy. When their confidence is restored, they will buy.
The Media is all over this issue and I think many home buyers are fence sitting. I also think it is letting up a bit. We have seen some modest increases in closings and a decrease in expired properties.
As for the folks trying to time the market, it does not work in stocks nor does it work in homes. A good deal is a good no matter what. Base your decision on fundamentals -- positive cash flow and location, location, location. This applies to both SFR and multi-family homes. If you can buy a SFR with positive cash flow and wait out the market, then now is a great time to consider a purchase.
If you need help with a financial analysis model on a property, please give me a call. We can evaluate it based on fundamentals and make a solid decision instead of letting the media noise paralyze you.
I did not burn myself with housing but got burnt with stocks, I thought Citi (C) was a steal at $35, it went to a low of $17.99
At $35 it was 40% from the peak and I also thought that it was at a "Mind bogling" price.
I do not want to make the same mistake again, with a house.
Gas price is also a major hurdle, along with inflation. I dont know how much I can afford to pay for mortgage. My expense is already up 20% - 30% from last year.
My descision to buy a house will depend on the economic indication (gas , inflation etc), and not on the price of the house.
Call your Senator for help on this. Why donate millions tents to China? Why not invite Chinese government to invest millions of condos in Florida and relocate people lost home in Sichuan?
Then we will have trade "balanced", and "sub prime issue resolved", and of course, we also help millions lost home in Sichuan earthquake...