Well, buyers are smart enough to realize that this isn't a hot market--hot being defined as properties selling quickly for close to full price. In fact, we're in a cool to cold market. Properties are taking a long time to sell, often at substantial discounts. Foreclosures are up. DOM is way up, in most cases. Hot? Not.
It is a great time to buy, considering interest rates, the amount of inventory on the market, and the willingness of more and more sellers to negotiate. And I do tell buyers that. But some buyers have houses they have to sell first and, in today's market, they really ought to sell before committing to buy another property. Other buyers worry that the price declines aren't through, yet. Sure, they can buy a house for $500,000 that would have gone for $600,000 18 months ago. They're worried that the same house will only be worth $400,000 next year. And buyers read the newspapers and watch TV. Yes, there's a lot of overwrought doom-and-gloom. But they can also see that the country appears to be on the verge of a recession. They can tell there's something wrong when American Home Mortgage folds, and Countrywide has to sell to Bank of America. If they track things, they see the Euro has gained 40% against the U.S. dollar, and Ford is no longer Number Two. Some of them are worried about the wars in Iraq and Afghanistan, with Iraq now estimated to cost over $1 trillion. They see petroleum around $100 a barrel. They go shopping and see even the staples--bread, milk, chicken--all way up. They see unemployment jump from 4.7% to 5.0% in one month.
I like real estate. For a lot of buyers, it makes sense to buy now. Absolutely. But there are 101 reasons why buyers are dragging their feet.