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Will anyone buy high and sell higher?

I think that question is on everyone's minds right now.

Yes, we all know the market is slow, and consumers are hesitant to buy because the prices are still high. They think to themselves, "Surely the market hasn't bottomed out yet. Why not wait a while longer?"

No one knows if the market has bottomed out or not, but honestly with the rates being pretty good and the prices not being so bad, why won't the properties listed for sale move?

In our area, I know that we have quite a few investors who make their living on buying low and selling high. I can understand why they'd wait to buy (unless they have indispensable funds at their availability).

So, why are the first time homebuyers taking advantage of the slower market? Is it fear? Or, are they waiting for the other shoe to drop? Are stories of the subprime fall making them think, "I'll never get a loan?"

This mystery baffles me everyday. I know the market goes in cycles, and changes are inevitable. We've seen this before, and those of us in the real estate network sit around with baited breath waiting on the turn.

Here's a thought for the people who are waiting to buy: "Why not buy now when the market is slow? Your rate will be very decent. Your payment will be affordable, and you will be making an investment that in a few years time will be profitable."

I'm not saying all of this as an anxious and curious mortgage banker. I'm just pointing out the inevitable. Honestly, if I didn't already own a home, I'd jump at the chance to find one now. There's plenty of inventory. Sellers are being flexible and paying most or all of the closing costs. There are foreclosures everywhere that are more than fairly priced, and the values will go up again. It's inevitable...

Anyone want to take a stab at solving the mystery for me? Any first time homebuyers out there want to help solve the mystery and answer that question?

Feeling contemplative today....

Posted by Michelle DuVall on 04/10/2007 01:13 PM

Comments (1)

market, prices, bottomed out, rates, properties, subprime, inventory, mystery, homebuyers

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1 Comments on Will anyone buy high and sell higher?

According to my unnamed but reliable "sources," here are some thoughts as to why buyers aren't buying:

For the most part, first-time home buyers are young, don't have a lot in liquid assets and don't make a lot of money. They can't put a lot of money down on a house, and are squeezed out of home ownership by being in a position of not being to afford the higher monthly payments complete with PITI and mortgage insurance premiums.
As many of you know, credit requirements have tightened. Many first-time home buyers don't have a sufficient credit history (and high enough credit scores) to be able to get a mortgage at today's great rates. At least FHA is still here helping them get a mortgage, but it gets back to having sufficient documentable income to afford the monthly payments on a house that is beyond their reach.
Because many first-time home buyers are priced out of the market, many current homeowners find themselves in a position of being unable to sell their home in order to move up (or downsize).
Because of the increase in forclosure rates, and because many homes on the market aren't selling, and because many potential first-time home buyers are priced out of the market, home prices have to come down. (Less demand + greater supply = lower price. I learned that in Economics 101 somewhere I think.)
Because home prices continue to fall in many areas, many buyers don't want to be in a position of buying a depreciating asset and wind up owing more on the house in a couple of years than it's worth. This will further compound the problem.
The "drive-by" media is not helping your cause.

Thus, it's our job to show them how they benefit from owning a home - do a rent vs. buy analysis, show how homeownership reduces income tax, and show how over the long haul, owning a home is a better investment than buying stocks. From there, it's just a question of affordability - if the prices of homes are out of their reach, all the positive analysis will not help them - they simply can not afford to buy right now.

04/23/2008 07:58 AM

by Lewis Corcoran (Northeast Community Mortgage)

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