Why Aren't More People Buying?

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confusion, home prices, mortgage, afford, real estateLet's see if I have this straight:

Home prices fell in November and hover near recent lows: S&P/Case-Shiller 20-city reportrates for a fixed mortgage remain at an all-time low: Freddie Mac and more people can afford to buy a home now than in decades: NAHB/Wells Fargo Housing Opportunity Index.

The country's Gross Domestic Product continues to climb: Bureau of Economic Analysis and the stock market is at the highest level since 2008Wall Street Journal.  

So, why aren't more people buying a home?

Is this yet something else we can blame on our financial institutions? I'm reading a lot of gripes about overly restrictive lending conditions facing potential homeowners as the main reason for the lag in home buying.

Not too many years ago, those same institutions were being criticized for not having standards that were restrictive enough. Then, the argument was the banks were writing too many mortgages to high risk borrowers who weren't able to meet their obligations.  

Apparently lenders need to be tough enough with their standards that those getting a mortgage won't default on them - while being lax enough to finance consumers who want to take advantage of current market conditions. That seems to be a fine needle to thread.

And I thought cold call phone sales were tough. At least I don't get blamed for a recession or the inability to end one.

Personally, I question if all of the fault lies where the fingers are being pointed. I wonder if a big part of the reason for the buying hesitation comes doesn't come from: 

  • A stunned feeling many still are recovering from that was left behind by the market's recent crash.
  • A lack of confidence now shared by those who once believed real estate was a rock solid investment.

mistake, mortgage, homes, real estate, buyersHow could consumers be anything else after the recent ride? Currently nearly one in four homeowners remain upside down with their homes: Wall Street Journal and article after article predict another wave of foreclosures to hit the market in the near future.

Considering real estate's recent track record, I suspect many consumers wouldn't take out a mortgage today with 0 percent interest rates.

Sometimes, mistakes can't be fixed and with this issue there is plenty of blame to go around. But when will real estate professionals again enjoy a strong, healthy, active market?

Someday. But it probably will take longer than it takes to drop interest rates to record rates or to have a home lose 40 percent of its value.

What will take more time is to rebuild the faith consumers once had in real estate. Our once positive, confident view of real estate has been wounded. Not critically, perhaps, but bad enough the market may be limping for some time into the future.  

Or maybe it's just all the banks' fault.  



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Comments (5)

Mike Carlier
Lakeville, MN
More opinions than you want to hear about.

The only absolutely valid reason for buying a home will never change.  Buying the right home will make your life and your family's life better.  If the home was bought with thoughtful consideration, market value can go up, down, or remain the same, but the financial commitment in most cases will end in thirty years.  The only ones who can mess things up are homeowners themselves.

Feb 19, 2012 10:28 PM
Mark Delgado
houses for rent, Solano County & Glen Cove - Benicia, CA
Benicia and Vallejo, Property Management, rental h

Yes buying a home is a huge financial decision.  But, is it really an investment or should it be viewed as providing shelter for you and your family?

Feb 19, 2012 10:53 PM
Brian Shaver
HomeSmart Realty - Westminster, CO

There are a lot of obvious economic reasons for slow sales. One reason is home owners currenty have a tough time selling without bringing cash to the table.  Plus it seems the government has everyone scared to death as well with fickle, indecisive and often irrational economic policy. Politicians should not control economic policy, but they do. My biggest belief is that people are irrational themselves, and follow trends.  Buyers don't always buy at the right time. fear of loosing an opportunity is a huge motivator.. Just watch what happens when home values and interest rates begin to increase.  Won't be long till you hear do you remember back in 2012 interest rates were below 4%, what was I thinking...

Feb 19, 2012 11:53 PM
Angela Lyons
REAZO - Missoula, MT
Reazo.com for home buyers and sellers.


I'm thinking you are very much correct. We need to get back to where a home is a place to raise a family, not an investment opportunity.

Feb 20, 2012 01:23 AM
Michele Cadogan 917-861-9166
Fillmore Real Estate 2990 Av U, Bklyn , NY 11229 - Brooklyn, NY
Licensed Real Estate Associate Broker -


I think that since the fed announced that it would not raise rates  until sometime next year, there is no urgency on the part of buyers. 

Feb 20, 2012 05:48 AM

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