It’s easy to assume that since the current housing market is indeed a buyer’s market, then these buyers would be crawling out of the woodwork, seeking every opportunity to invest, to buy up real estate, and to add to their own personal wealth. Yet even with mortgage rates at all-time lows and home prices at ridiculously low levels, these buyers are still not dipping their toes into the warm waters. Why?
What is keeping these people from buying houses, from investing in real estate –which is, arguably, one of the only consistent positive investments over a long period of time? It would seem that people of wealth and prosperity, at least, would be taking up properties that would make great investments for the long-term. Yet they aren’t and the question remains why?
Is the economic climate simply too volatile?
It may be fair to say that the current economic climate is still too volatile for these individuals. While the recession has left millions of people without jobs, it has reached people from all walks of life, from the low-wage earning factory worker to the higher paid executives. Many businesses are looking to the goings on in Washington and waiting to figure out how the health care reform, financial reform, and other changes to the tax code will affect their bottom line before they hire new people, or even before they lay off another wave of employees.
After all, if the new influx of laws cost each business, on average, fifteen thousand dollars a year, for example, then those businesses may decide that they have to let another employee go. They also may decide that they have to cut an executive if they wish to add a few lower wage earners. This uncertainty, then, could explain why so many people who might otherwise be willing to dive right in and invest in a second home, or third, are holding back, waiting, hoping that the recession doesn’t infiltrate their lives any more than it already has.
Are mortgages too tough to qualify for?
Other would-be investors may simply not be able to qualify for a mortgage. Their income, coupled with a first mortgage, may disqualify them from buying an investment property. Financial institutions are shying away from lending out money as they had only a few short years ago. While this is certainly understandable, it is leaving an unintended situation in that the same financial institutions that are denying mortgages are also the ones that are holding onto foreclosed properties because there aren’t enough qualified or willing buyers.
It is difficult for most people to predict what will happen within the housing industry in the next year or two, and even more challenging given so many unknown variables, such as what will the government do next in its attempts to reform the economy and the way businesses conduct themselves? There is still plenty of chatter among politicians and want-to-be politicians about what to do with the housing market and how to get people out of toxic mortgages and, at the same time, how to get others to begin buying homes again, but until some concrete, workable solutions become apparent, the investors in housing may continue to stay away.
Who can blame them? After all, buying a house is one of the biggest decisions anyone will ever make with their money and if there are questions that need to be answered, then there is reason enough to stay away from the market altogether.
Finding the answers for these potential buyers
As professionals in the industry, we have our finger on the pulse better than most average homeowners, or would-be homeowners. It’s incumbent, then, upon us to share what we do know, to research what we don’t, and spread the word to those individuals who can afford a home and want to buy one that right now may be the best time to buy, and that the naysayers may actually be those that were burned already.
David
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