We hear a lot of talk about fence sitters, people who, for one reason or other, can't decide to pull the trigger and commit to buying a new home. Do they really exist in great numbers? A couple years ago, there were some folks who were waiting for the market to stabilize from its free-fall. That may have been a good strategy for a discretionary buyer in 2008 or 2009. That was then.
We are now in a real estate environment that is not seeing dramatic decreases in value if any. Most of the people who put their lives on hold in 2008 have made a decision to either buy a new home or to forget about it. With interest rates increasing, we have probably either reached or passed the best economic time to buy.
Even though it's apparent that there will be no dramatic change to the real estate market that will make buying more cost-effective, the alleged fence sitters have not made a commitment, and I think I know why. Fence sitters may only exist in the collective imagination of the real estate industry. I don't think there is a huge pool of qualifiable buyers trying to decide whether this is the time to get off the fence.
Most people who tell us that they are waiting to buy may really be waiting until they are capable of buying. Many who would like to be up move up buyers simply don't have the resources to make it happen. They may say they are trying to decide, or that they are waiting for prices to drop further. In reality, they probably just can't do it.
The other two segments of the market, first time buyers and investors, are what is keeping the flame lit. Many investors see opportunity, and are extending themselves to their limits to take advantage of trends that suggest that the pool of renters will only grow in the next few years.
First time buyers are still interested in buying, but they have all the age-old issues common among the mostly young group. They have a new jobs that aren't always the most stable, they have student loans and other starting up expenses that they have financed. Those who are able to buy are buying. Among other motivators, their landlords often provide the incentive for them to get their own home.
My point is that there may not be many potential home buyers who remain undecided. We have a fragile, recovering economy that so far has not stimulated the housing industry. We have high unemployment and a generation of baby boomers who are either through with their buying or looking to sell. I just don't think there are very many fence sitters.
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