“In recent years there has not been a better time to buy a home, so what are people waiting for?”
It is not a secret that home sales around the nation have declined from peak levels reached in 2005. One can speculate about the reasons for the downturn, but I’m interested in finding answers to why it has continued despite solid fundamentals.
During recent discussions with realtors, I have discovered that there are consumers actively looking to purchase homes but that they don’t have any sense of urgency.
Therefore, I pose this question to our readers, “What are the reasons that many actively looking home buyers are sitting on the sidelines, seemingly waiting for something to happen? What is it that they’re waiting for?”
Home buying fundamentals have arguably improved since the pinnacle of the housing boom. Interest rates are at very low levels, high leverage loan programs are still available for first time buyers, and sellers have negotiating power. Therefore, all the micro economic reasons to purchase a home remain.
On a macro economic scale construction costs have increased considerably over the past decade and show no sign of slow down as raw materials and energy prices continue to rise. Additionally, land is a non-renewing asset; there is a limited supply and infinite demand. Therefore, as construction costs increase, land becomes scarcer, and the region continues to realize population growth, real estate prices should continue to increase once we work through the current supply.
The current supply of homes on the market is high which has made today a buyers market. However, building permits are down to a record low and sellers are experiencing pricing pressures; both of which will bring supply back in line with demand sooner than later. When that happens I expect a new real estate market to emerge that promotes and sustains equilibrium between buyers and sellers.
Therefore, what are potential homebuyers waiting for? When the equilibrium is reestablished buyers no longer will hold the negotiating power currently available. Additionally, if the dollar continues to weaken peoples buying power will be even less.
Tags: advice, buying, real estate, selling
December 1st, 2007 at 10:03 am
You make a lot of good points, but it may take a while longer to work through the excess supply of homes on the market. Picking the bottom of any market is very tough to do, but I suspect anyone buying now will have bought close to the bottom which is the best you can hope to do.
December 4th, 2007 at 11:08 pm
[…] comrade. I wonder what Howie might say if the Donald did seriously ask him for advice on his real estate prospects. The answer is in the body language. Howie has no clue what he’s talking about and […]