The media has been telling us it's a buyer market for some time. The real estate community talks about it too. Everyone seems to believe it.
I think the Buyer's Market is over-rated.
Before you get your britches in a bunch, hear me out.
- Saying it's a buyer's market, as a general rule, overlooks those markets, and niches, where this is clearly not the case.
- Calling it a buyer's market gives buyers a false sense of security. They think they are always in the driver's seat, calling all the shots, and can get homes for 10%, 20% or more off the market value. Not always so.
- It suggests that homes are sitting around waiting for buyers (yep there are plenty out there) to make any offer, and that sellers are desperate and will relinquish their homes for whatever the buyers are willing to pay. Buyers won't have to compete, and they can afford to take their time making a decision since inventory isn't moving until the buyers make it move. Again, not always so.
Granted, there are plenty of markets where the inventory is high and the demand low, where buyers can be pretty choosy, and prices are still falling. Some markets are pretty crappy right now. I remember being told that less than 6 months inventory was a seller's market, 6 months or so was a balanced market, and 8 or more months indicated a buyer's market - it was in a CRS class, and I think NAR also cites these numbers. Perhaps. But it ain't that simple. Not anymore.
It seems that "Buyer's Market" just doesn't work all that well to classify our current market, perhaps the most difficult in decades, except in the most general sort of way. And it deludes buyers in some market areas and niches (e.g., the least expensive homes or REOs) into thinking they will get a great deal...easily, with little effort and on their terms.
Consider the REOs - we now see many offers (sometimes 15-20) on these, often within a day of the home coming on the market, and commonly many are over asking price (maybe not true in your area but becoming far more common here in SoCal). As someone with multiple buyers who have been through this drill several times and who are frustrated, and disappointed...is this niche a buyer's market? Nope, at least not in their minds.
And how about non-distress homes we are seeing with multiple offers. I had one just a few weeks ago (within 24 hours there were well more than 10 offers, many over asking - fortunately my buyers lucked out, but the sellers had the luxury of picking which offer they wanted to pursue). And it's happening elsewhere...an article in the Los Angeles Times makes this point very clear.
We need to truly understand our particularly markets and individual niches so we do not mislead buyers into a false sense of security or have them make decisions based on misinformation. If we can't communicate what is going on we lose credibility, and aren't providing any greater value to buyers than when they simply make decisions based on what they read in the papers.
Calling it a buyer's market is the easy way out. Everyone "knows" what you mean, and you don't have to understand the realities of the market nor explain it when folks ask.
I still say the buyer's market is over-rated! I suspect some folks may agree.
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All content copyright © 2009 Jeff Dowler Carlsbad Homes and Real Estate Tidbits
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