If they truly can buy, some of the reasons are fear, short term plans to relocate, comfort with their current location, just to name a few. Right now, with the past 4 years or so of declining market in much if not all of the country, I've been advising clients to hold off if they aren't committed to owning for at least 3 years and possibly 5.
I do believe the market will return and that many current buyers will be thrilled with their choice to buy now while rates & prices are low, but buying is a decision people have to be committed to and comfortable with to move forward.
1. some people don't want the responsibility of maintenance and repairs: plumbing , landscaping, painting, roof, floors, heating/AC, etc., they'd rather call the landlord in the middle of the night when the toilet backs up, or let the landlord shoulder the cost of a $xx,xxx sewer line replacement.
2. some people come from cultures where home ownership is not particularly desirable and they're used to renting. A friend of mine married a woman from Russia, and when she first saw the spacious 5-bedroom house he owned she asked who was going to clean all that space, and wanted to sell it and rent a smaller apartment.
Barbara Hunt, Realtor
Keller Williams Realty Cupertino
Fear and uninformed. A lot of people may not understand that there are programs to help them buy, that interest rates are great. The 88 and Axis for example are approved for the BEGIN program an individual who makes less than $87,000 per year may qualify for a city assistant second loan for up to 20% down, 3% interest. Also the MCC, Mortgage Credit Certificate can help with taxes.
There are also people who seriously can not afford or qualify to purchase. And as the other agents stated, it depends on job security and their comfort level having a mortgage.
Why do you ask? Are you considering buying?
There is a big disconnect. Banks are in a position to lend more, but have opted to engage other investments. With rates this low, you really can't expect a lot of enthusiasm for lending. Though plenty of agents will tell you that their clients are encountering only a little difficulty in obtaining loans, there are plenty of people who don't get as far as contacting an agent. With homes more affordable than in many decades, there should be a lot more buying.
Confidence might be the biggest casualty in all of this. Whether it's confidence in government or confidence in the financial industry we're talking about, the effect is to keep spending down - especially for big ticket items like real estate.
It is unfortunate that this uncertainty has so infected so much thinking.
Renting may offer some shelter from slipping real estate prices. But consumers forget that the interest rate they pay is as important as price.
New developments on the national scene favor more buying.
of Longmont, CO
Are you a homeowner who is thinking of selling and renting...not because you have to but you want to? There are many people who choose not to own a home. There is a certain level of commitment in home ownership --maintenance, property taxes, etc -- and it is a long term type of investment. It is not like buying a stock...you can't call a realtor and have it sold within 24 hours. As employers are less loyal to employees, employees are less commited to homeownership and long term investments. The beauty of America, is that we can all have our own opinions about what is best for us...and we don't have to do what everyone else is doing!
And more specific to your question...yes, many people can handle a large payment today, but they may have a prior credit problem or no money saved. Plus, lenders are more careful about the true market value of a home and the mortgage they are willing to offer. And owning a home is more than the monthly mortgage cost, and more than property taxes. Little things like clogged drains require fixing by the homeowner...you can't usually call the property manager to come fix it!
Hope my answer, and the others, have given you some insight into the choices people make about home ownership!
Additionally, baby boomers are selling and renting in droves in Southern California. They've played the "homeownership" game for decades and are over it. They'd rather not have the stress of taxes, maintenance and upkeep, don't need a large home anymore and just want to travel and live a leisurely carefree life. I'm not suggesting that all baby-boomers are doing this but I've sure seen a lot of it lately.
There's a whole new attitude lingering on the horizon I feel. The USA is becoming a little more like Europe and other parts of the world everyday in that there is an ever increasing preponderance of landlords and a huge increase in renters coupled with affordable investment opportunities. You might almost call it a paradigm shift. It would be the sign of things to come.
Interesting enough with rents increasing in the valley some renters are now looking to buy. When I find this out in an open house, I ask why now? The motivation is the increasing rents. Most every reason has been covered in these discussion but the biggest hurdles are no down payment, bad credit, high debt, spotty work history, etc.
Then there are those that want to buy but have little savings and feel trapped as a renter. Some renters lack the knowledge or motivation (they're comfortable) to check out possible first time buyer programs or even if they qualifiy to buy. Fear is a big factor.
Keller Williams Realty
You have to understand the Media sows the environment with fear and will continue to do so. Remember also it's never as bad as they report it is, conversely it also is never as good as thay say either. The people who look past this and don't listen to the media are the ones who are buying, they are secure enough ( and have the where with all ) and smart enough to know when to "pull the trigger" and buy.
I hope this helps, feel free to contact me with any questions,
At your service,
One of the reasons is they don't know what will happen to their job tomorrow. Their salary has been cut, expenses are up like gas, food, medical insurance bills, etc..
Regardless of all time low interest rate, loans are hard to obtain if you don't have high FICO scores, stable job that will be verified by lenders the moment before they lend money. No more fake incomes, no more fake employment status. Those time are gone.
Now, do you think real estate market will be the same 10, 20 years from now? That I don't know. But if you have money, you should buying real properties for your portfolio.
In addition it may be simple reasons such as procrastination, or confusion about the process of getting a home of their own.
With Real Estate prices as low as they are, interest rates as low as they are and rents rising as fast as they have been it no longer makes sense to rent, if you can buy.
Currently clients that I am working with to get homes of their own are motivated by recent rent increases they have been subjected to of 10% to 40% rent increases just in the past year, and those rent increases will continue., while a 30 year fixed rate loan will never increase.
As they say "The rents are too high"
We are headed into a period of inflation that will force rents and Real Estate prices and interest rates much higher.
Real Estate Broker/REALTOR
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