Why Buyers Are Not Buying (According to Buyers ...)

Buyer, Seller, Real Estate News

The National Association of Home Builders found the top reasons why buyers haven't bought from self-described "on the fence" buyers.

44% Waiting for Lower Mortgage Rates

I don't see mortgage rates going lower unless the government decides to subsidize lower interest rates. While this may be a possibility with the new economic stimulus plan, I wouldn't place my hopes on it. And rates are so low that if you did buy now you would have a lower rate than at least 90% of your friends.

41% Not Sure If They Can Qualify For Mortgage

This is silly. Call a mortgage broker and get pre-qualified. It's free and you will know for sure if you can get a mortgage, for how much and what your payments will be.

38% Expect Lower Prices

This is a legimitate concern. As long as there are short sales & foreclosures we will see prices drifting lower.

However, as soon as the economy gets back on track and people can afford their mortgages again then these lower prices will cease to exist. We will go back to the old "floor" of property values (what people usually wouldn't go below) of what the home seller bought the house for. After all, why sell at a loss and hurt your credit when you afford the home? Thus we will see the more popular neighborhoods and regions will bounce back first because the short sale/foreclosures are specific to neighborhood and/or region and those will be snatched up quickly.

More importantly, trying to call a bottom in the market isn't worth it. If you are planning to own a home for a long term period of 5 plus years; then even if prices go down the next year ...you will make it up the year after or the year after that. And the whole time you will have the home you wanted along with the tax write offs with a mortgage at one of the lowest rates available in history.

Home Buyers need to go back to the old way of thinking where you need to own a home for 2+ years in order to sell it and just break even (because of closing cost). The thinking of buying a home and flipping it to make a profit immediately is a thing of the past.

If you are looking at condos or townhomes and they all have the same view then you can probably afford to be patient. The same floorplan and view probably will be available whenever you decide to buy. But if you are looking in older neighborhoods or neighborhoods with unique floorplans or views than what you like now may not be available next year. Is it worth the wait to loose what you want and have to settle?

One final note. Bottoms are just like recessions are always called after the fact. After all, you can't tell something has "bottomed" until it started moving up again. So while you might be waiting for the bottom it can pass you by.