Buyers are waiting to buy expecting prices to drop further and sellers are waiting to sell until the market improves. Both are trying to "time" the market and it can't be done. Everyone is concerned about their "investment". The reality is unless you are buying/selling a property that is not your primary residence, you are not buying/selling an "investment".
Your primary residence is your shelter, a place to make memories, and a great way to establish financial stability. An investment property is purchased with completely different goals and set of standards. The past 6 years have clouded people's perception of investing in real estate. Everyone heard the get rich quick stories of people who bought a house on a Monday and sold it for $20K more on Friday. There were many pseudo investors who made money but there also many who lost money even when times were good. Regardless, those people weren't investing in real estate...they were day trading.
So here we are in a market where inventory is high and interest rates are very good and yet no one is moving. It is ironic that when we were in a seller's market everyone was rushing to buy a house as if there was never going to be another opportunity to buy a home. Now that we are in a buyer's market no one wants to commit for fear something better will list for less. Obviously the price of homes responds to supply and demand but everyone is responding to a fictitious lack of supply (then) and an exaggerated lack of demand (now).
Let me give you two examples of the price of waiting...
I know of a seller who has a very small mortgage on a property he has listed for sale. There have been only 2 showings in 35 days which by National Association of REALTOR standards indicates the property is overpriced. The seller will not reduce his price because he doesn't want to "lose money". This statement is based on what he thinks he could have gotten for his home 3 years ago NOT on factual numbers. From his purchase price in the late 80's to his list price now (minus his small mortgage), he is going to make a substantial amount of money...how is that "losing"? If the house doesn't sell this spring he will stand to lose more if the market drops .05% per month for the next 8-12 months (as predicted) than he will by moderately reducing the price now and getting it sold. I won't even go in to the emotional costs of holding on to this particular home. Inventory continues to sit because there are countless sellers thinking the same way.
Then there are the buyers. I recently worked with a buyer who found her dream home but refused to compromise on price with the seller. She based her offer on predictions of future price decreases and expects the seller to accept now even though her offer is less than current market value. There is a good chance she will lose this home. Let's evaluate the cost of waiting...if the market decreases the .05% stated above on a $530K house the price would reduce to approximately $500K (this is not compounded - so it would be less) at 6% interest there would be a difference in monthly payments of approximately $200. However if interest rates rise from 6% to 7% that same house would cost the seller $350 more per month. There are buyers waiting to buy BUT what are they waiting for??
It is impossible to "time" the market because there are too many variables. Buyers and sellers need to establish clear goals, research the inventory, and determine an educated list price/offer. That doesn't mean that every listing will sell or that every offer is going to result in a purchase but it will help both sides come to a compromise. We will make the fictitious market a reality or we can work to communicate with each other to create a solution that is a win-win for both sides.
Don't wait...be distinct in all that you do.
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