I must have missed the letter from the National Association of Realtors asking me to post this question on bulletin boards. Seems like Matthew and some of the others did get it. See, for instance, this current thread on Trulia: http://www.trulia.com/voices/General_Area/Why_are_so_many_pe
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?