It is no secret to anyone that is a veteran of real estate that we are in a buyer's market, but where are the buyers? Interest rates are still reasonable, home prices, and new homes are is such a plentiful state that it should be easy to pick the perfect home and negotiate the right terms! So where are the buyers?
Are the buyers sitting on the fence looking to time the market and buy a home or real estate at the best possible price? Do the buyers have the cash needed to purchase a home with some of the new more stringent lending requirements? Do the buyers have the down payment? or are we tapped out of buyers? We must ask ourselves how many buyers are really left out there? In the past few years the number of home owners in the United States has climbed to new historic levels, and yet over 35% of all homes sold in the last few years were sold as "Not owner occupied!" That means investment, and second homes took a major chunk of all home sales in the last few years? What happens when we remove 30% of all real estate sales?
I was reading an article online this evening, and had to pause to reflect on the implications, and there will be many to think about! Existing homes sale continue to fall, and if builder were doing well, they would not have to offer incentives!
Good times will abound again in real estate when we area able to coax the cautious homebuyer's off the fence. Trying to identify the new buyers needs and niche markets will remain a daunting task for many a real estate professional. There are many questions that have to be asked before we proceed in our quest! What will the remaining home buyers be looking for? Where will they be looking? What will they be willing to spend? What concessions will they demand? Will new financing requirement change how we qualify potential buyers, and first time home-buyers? Will the buyers be middle range, luxury homes, second homes, investors, baby boomer's? Share your thoughts!
RE/MAX Paramount Properties 678-595-5283 Direct
Or 888-940-0074 Toll Free Office
Atlanta Real Estate Agents, Alpharetta GA Homes for Sale, Dunwoody GA Homes for Sale, Atlanta Real Estate & Atlanta Homes for Sale 
Gwinnett Homes for Sale
Atlanta Real Estate Blog, Cumming GA Homes 
Mary I agree. There are a lot of homes out there, but it is a great opportunity to buy! Especially if you are a cash buyer and can close quick!
Ready for this?
IMHO the real estate market will not improve, significantly, until the interest rates are lowered 2 or 3%.
Today is 28 August 2007 and Ed DeChristopher predicted it!
Homes for sale in Fredericksburg VA are becoming more and more of a bargain now!
Jim - I think people watch too much TV! If you say the sky is falling often enough people will begin to listen. When you tell buyers this is a great market to be in they look at you like you're from Mars!
Jim,
I'm sure it is not the interest rates...it is people who do not have enough money down to qualify. They are still looking for the no money down loans. No one seems to have no money to put down and payments would be too high and they are worried about getting stuck in the foreclosure vacuum.
I have been fortunate. My buyers have not seemed to fall in that category as much. I do have a few seller's waiting and they me be quite disappointed if they continue to do so.
Jim - here's my take on it. Buyers have been trying to time the market for a while now. Somehow many of them think that they can "call the bottom" when we all know that it is not possible. That being said, I think that the changing mortgage market has created a bit of a sinkhole in the market and here's why.
The current homebuyers that were already looking (albeit slowly and cautiously) may very well have lost the loan that they thought that they were going to get because programs are being discontinued on a daily basis. Some of them may have been looking in a price range that they thought that they could afford based on a mortgage that they thought that they could get. When these programs disappeared, they may still have qualified for a mortgage, but not for the same price range that they had set their minds on.
The buyers that were already in the market may now be faced with a choice of buying a less expensive home or trying to "wait out the market" to see what happens. It is not a wise decision, but a decision that many people will make because they lack the understanding of how waiting may actually weaken their buying power, despite our best efforts to educate them.
The sub-prime and jumbo mortgage problems have also contributed greatly to the shrinking of the buyer pool. Again, this is because of the readjustment period that is needed to wrap their mind around this new market. Many of the sub-prime borrowers will now be unable to qualify for a mortgage that they can afford, which takes them out of the buying pool. While people can adjust to slight up-ticks in the lending rate, it is difficult to swallow a full point increase over a weekend, which is what happened to jumbo buyers, even though many of them have excellent credit, a good down payment, and can go full doc. This huge jump may have taken many of the jumbo buyers out of the market temporarily because they too must adjust their expectations of what they can currently afford.
This is the exact reason that the buyers that are ready and able should also be willing. What happens if mortgage rates climb as they "wait out the market?" They will lose buying power. The sellers in today's market are the ones that have been hit because the buyer pool was reduced while they were listed. This will result in motivated sellers dropping prices and great buying opportunities will exist. If they buy now and the market rebounds in the next year or so, they can increase their equity by a great deal by buying low now. At some point, the investors will start scooping up these homes and flipping them again.
According the Lawrence Yun (VP of Research for NAR), the signs are there for a 4th quarter rebound, with foreign money likely being a big factor due to the weak dollar. I would suggest that everyone reads this month's REALTOR® Magazine (see page 16). This may be a tool that we can all use to pull buyers off of the fence.
Sorry for the extra-long response, but I had a lot of thoughts on this issue.
Jim,
Here in the Vancouver / Portland metro market the local press tends to parrot the national press using language that has made buyers very cautious and slower to take action with their next (or, first) real estate purchase. The more realistic view of our local market is that the action at or one standard-deviation around the Median Home price in our market is showing both a healthy increase in price, while now selling at the historically "normal" 60 or so days.
For the homes priced at the higher end, we are seeing softness and sluggishness in moving that inventory. However, I also see this as a great time for someone wanting to move up into the higher-ind home category -- the spread between the the "mainstream home" and the "higher-end" homes is favorably narrow for buyers in our market right now!
It is also my opinion the buyers are looking right now. They may be cautious and taking more time -- even taking more time to attach themselves to a real estate agent and mortgage professional. Our mission is to stay visible to the buyer pool and be ready when they step forward to take action.
We enjoy your posts, and look forward to more...
John
I've had good attendance at the last three open houses - which certainly is positive. However, over and over again, the guests said that they can't do anything until they get their current home in contract. My open houses have all been in the "move-up" price range. Per the guests comments, it seems that the fist-time-buyer in the lower end home price are in short supply. No doubt they're also the ones most affected by the sudden need to have some money saved up in order to buy.
I tell my sellers that real estate is "trickle up" and that we've lost many in that first tier. So how do we get them back in the market - SAFELY!
Dawn it is no the time for buyers to sit on the fence! How do we get them back in?
Brian So no recovery until the Fed lowers the rates? What will the market do if they don't? Will prices continue to drop in some areas?
Ed there are a lot of bargains out there, By the time the Feds dropped rates that low, the patient will have flatlined.
Linda It is not so much the press. In Atlanta there are too many homes for sale, they are not selling, and everyone knows it. You can pass seas of for sales signs in some areas. Foreclosures are through the roof, and just keep growing. It is hard to hide the body of a dead elephant! After a while it starts to smell bad!
Neal I am at the point where it is back to sanity. People with no money down should not be buying homes. Thye are a major part of the problem.
Randy you are blessed. I read recently that the best place right now is Hawaii for real estate. They seemed to have weathered this better than just about everyone!
Missy, timing the market is the hardest thing to do. In the meantime renters have no tax write offs for mortgage, they are paying rent, and no equity build up. Perhaps our key is to focus on building equity instead of using home as an ATM and tapping the equity every 5 months to pay the bills.
John Although there is a lot of inventory for homes above 1 million dollars in Atlanta, sales are three times what they should be in a normal market. So there are some bright spots. The press would have you believe everything is really bad. It isn't.
Elaine It is a domino effect. They need to sell in order to buy, and they cannot sell because they are not priced right, not marketed right...
*****I'd love to hear how we can get buyers back into the market.*****
Deb you are blessed!
Jennifer thanks for your input. I think in the long haul tighter lending will be a good thing for the market.
Jim,
I have been in a coaching program for the past 7 months and one of the issues that my coach and I have been conversing about is whether it is better to have just buyers in this type of market or to continue to go after the listings. She maintains that having a good listing pool will bring the buyers. Pricing the house where it needs to be is paramount not only in getting your listing sold but to attract the buyers and creating buyer urgency! Her idea of pricing is to position the house ahead of the market so that one is not chasing the market down. After careful consideration, I would have to say that this is truly the way we should be conducting our business at this point- meaning, business as usual. Go after those listings, as they will ultimately bring you those buyers that we want and need
Thanks for listening
Bonnie Joffe/ REMAX of Cherry Hill, New Jersey
I say push them off the fence! hehe...............really, I have been fortunate to have several buyers lately and they are wondering if the market has hit bottom. They are offering less, but still willing to negotiate. They want fixed rate loans and are more particular about repair issues.
I can offer no advice on whether or not we have hit bottom, although I believe we have in Indianapolis. I mostly consult with them about their alternatives and if we can get them into a home they like within their means, they are moving...............
Hi Jim,
I think the biggest problem right now is the fact that many Buyers are just sitting on the sideline. They read the real estate news stories that come out everyday and hear about how prices "continue to fall". In my opinion, they are waiting until more positive news comes out about market conditions. From their perspective look at it this way...if I run out and buy a home now and find out in another 3 months that I could have paid several thousands of dollars less, how do you think that might make one feel? That's their view on things the way I see it.
-Keith
RE/MAX Olympic, Manassas VA
www.MyRealtorKeith.com
Paula I like the push idea. I personally do not belive we've hit a bottom at all. My sense is they are just starting to unravel this one.
Keith I am also licensed in Virginia. The problem in your market is fear. The prices went up so high, so quick...that persons are afraid to risk 100K in equity.
Around here, I feel it is a standoff between the sellers and buyers. The sellers won't budge in their pricing, so the buyers won't buy. Someone's gonna have to say "uncle" soon!
Jim, we've been discussing this here in FL for over a year now. As we're #2 in the country for foreclosures, it's been a huge challenge to get homes sold. We have about 28-30 months of inventory, if nothing else is listed. Okay, each market is different and I'm glad to hear that some agents are selling houses in their areas. If your sellers are moving to the Daytona Beach area, call me! I've tried to reason with some friends around town that we should all drop 1-2 listings of unmotivated sellers that won't listen to us and reduce prices. That will cut down on some of the excess inventory. Financing restrictions are coming and we're just going to have to deal with it! I've writtens some offers in the last few months and sellers don't want to get realistic. I've gotten several offers bilateral and they fall apart because of inspections. The sellers still think they can sell a house for top dollar and not put a nickel into it so that everything is in working order. I'm having a love/hate relationship with our As Is contracts! And then you have agents that don't have a clue what to do with their sellers who are losing their houses because of defaults and foreclosures. I'm tired of educating the buyers and sellers and sometimes other agents customers but his is what we have. We, the agents of the industry, need to start speaking a different language. We need to get eveyone speaking about what a great market this is for buyers. This needs to come from our state associations and NAR. This needs to start coming from all the organizations that we have worked to get all those designations from. A couple ads on tv is not the only answer. We need to get our local newspapers putting out some good press for a change. But the change starts right here and right now.
Sherry you and I are both in sales. We both earn an income when a home closes for a buyer and seller's. We get paid extremely well for getting the deal done, so we also have to take a lot of the grief and ahrd work when it doesn't sell, or negotiations become tougher. It is hard to tell a seller, "No, I'm sorry I cannot take your listing at this price and in this condition, it will never sell!" Most agents take any listing, that is a recipe for disaster. Real estate agents have to go back to the way it was in a normal market, tell sellers and buyers the truth! When was the last time you heard an agent tell a buyer I can't show you this home you don't qualify to buy it? Corrections in markets do not take place overnight, and will not get well with a few ads, or marketing campaign. The reality is this market is much worse than they are letting on. So the question begs to be asked...how do we sell this to buyers? How do we educate the buyers that this is along term commitment, We need to get the message out to clients that it isn't smart to use their home as an ATM. We must educate the buyers that the right thing to do is own a home without a mortgage! Our industry as a whole is acting totally irresponsible and totally self serving.
Diane thank you for your insights. Like you, I am a firm believer that we need buyers in a buyers market! I went to a seminar today where the main thrust was to list. I got up and walked out! Ridiculous!