The rates are so good...why are buyers still afraid to buy?

  • July 29 2010 - Warner Robins
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Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (77)

Profile picture for Mr Caveat
Prices will drop more

prices *may* drop more and buyers should protect themselves when possible. its not always possible, this time though, its pretty obvious.
  • July 31 2010
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Prices will drop more
  • July 31 2010
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Profile picture for the_country_hick
Shevy, "Many buyers are waiting because they have cash and really low rates hurt them. As when rates rise it will put downward pressure on prices."

Exactly true. When interest rates go from 5% to 7% buying power will drop by 23.9%. That is almost 1/4 of buying ability taken away for nothing.

It only makes sense that when buying power drops by 1/4 that house prices will decline to meet the buying ability.

Higher interest rates NOW!!!!
  • July 31 2010
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Many buyers are waiting because they have cash and really low rates hurt them. As when rates rise it will put downward pressure on prices. This combined with the amount of shadow inventory the banks are holding gives buyers plenty of reason to wait.

  • July 31 2010
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Profile picture for sunnyview
I think one of the biggest reasons is unemployment. It creates fear and insecurity and those aren't conducive to making long term financial decisions. It makes people want to wait and see.
  • July 31 2010
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Profile picture for blank screen EXILED
"let the buyer beware" --

No, it is "let the lender beware"; since the buyer has every right to walk away, and let the agent beware because we are in a litigious society and there continues to be a higher chance of being sued and having complaints file at both the local board level and the state licensing level; and some buyers are really good at making sure an agent will have bad press for at least 10 years.

We haven't had a "free market economy" since Roosevelt's "new deal" in the 1930's.  And a free market economy states nothing about a property being appraised wrong by the lenders, nor anything about encouraging buyers to pay inflated prices.

If an agent really believed "let the buyer beware", that would be what they would be telling their clients rather than "now is the best time to buy".

So since the agent is now saying "let the buyer beware", that agent obviously believes that now is NOT the time to buy!  And if the agent says otherwise, the agent is intentionally violating their code of ethics. There is no "fear" involved it is just "common sense" that agents know, but intentionally want to lie about.

And besides, I've already written a thesis disproving Economics 101.
  • July 31 2010
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Obviously there are mant reasons why buyers are afraid. This is suppose to be a site where people can give their opinion and hopefully assist others. Criticizing what everyone says dilutes this purpose

  • July 31 2010
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Profile picture for Mr Caveat
But please don't be deluded into thinking that you aren't paying for taxes, insurance and maintenance with your rent.

that is an unfair comparison, most proper landlords have 30, 40, 50% + equity. that is WHY they can compete with homesales for affordability.

if you have 50% down, that is not the same as saying "buy a house". a good investor can survive in this type of market too.
  • July 31 2010
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Profile picture for the_country_hick
In many places across the country it is true that insurance and property taxes have increased. Yet a strange thing has happened. Rental costs have actually gone down. That means the landlord is losing money renting as they can not pass on all of the costs that higher taxes and insurance bring to them.

I posted the things below not because I am against buying a house. I actually want and desire even to buy a house. I can however see the disadvantages of buying and some of the advantages of renting.

Why does having interest rates low mean I should buy a house? That makes no sense. As those rates increase house prices should decrease. That means lower prices for waiting.

I posted the things below trying to get someone to give real solid reasons that would override those truthful concerns. Hopefully even from the person who asked the original question we are all replying to.

p.s. if a landlord does not perform required repairs they can be forced into court to explain themselves and that gets expensive fast. Thus most would try to do what is required as it is cheaper. Plus a renter has many rights under the law.
  • July 30 2010
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Profile picture for hpvanc
Joan,

I know you are new here, but yes we have at least one regular posting realtor that pushes home ownership for everyone, has even suggested that it is a basic human right.  If you would like I'm sure someone could send you a link to their profile, and if several people do I'm betting you would get links to several different realtors.

I think you could soften up country_hick's list a little bit, and it would be fully accurate. 

The repairs, taxes, maintenance and insurance are included in your fixed monthly outlay on a rental. 

You will not have to wait until you sell to move, and since most leases are not more than a year in length, you will not be stuck for more than that term if you do need to move.

While the landlord may not make the repairs in what you consider a timely manner, it is still their responsibility not yours to make them when you are in a rental.

Overall I like the tone of your posts, welcome to Zillow.
  • July 30 2010
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Dan,
Rent vs buying?  Whatever floats your boat. 

But please don't be deluded into thinking that you aren't paying for taxes, insurance and maintenance with your rent.
And some landlords are a bit more.....landlordly than others.  Meaning you may have one who deals with repairs on a timely basis.  Others, not so much. 
And most people do have something called a lease which means you can't just pick up and go without penalty.

Home ownership obviously isn't for everybody.  Were you thinking somebody was saying it was?
  • July 30 2010
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Profile picture for the_country_hick
What is the real advantage in buying a house?

When buying you have to pay for all needed repairs.

When buying you have to pay taxes and insurance.

When buying you risk being sued if someone gets hurt on your property.

When buying you make no money for 7 years with a 30 year mortgage based on the amortization tables and realtor fees.

When buying you can not just move when you want to.
-----
When renting you know your exact payment each and every month.

When renting you can choose not pay for insurance.

When renting you can decide to move and it is as easy and pack and go.

When renting someone else has to handle all needed repairs.

When renting you can sit back and relax. The landlord has to handle the tough problems.

----
Most times when renting the monthly cost is LOWER than when buying.

Why should I buy again?
  • July 30 2010
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Profile picture for Mr Caveat
once in a lifetime?

well, i guess vegas is 90 minutes away by car...
  • July 30 2010
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I say its the fear factor from the news to much information has scared buyers into thinking buying a house is like buying a car once you own it it loses value
  • July 30 2010
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Profile picture for the_country_hick
By historic standards interest rates are very low.

By historic standards house prices are STILL TO HIGH!

any other questions?
  • July 30 2010
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In the San Francisco market I am not sensing fear from the Buyers, just caution. Rates are low, prices are flat. They recognize that this is a once in a lifetime opportunity to get into the market and they want to make the right choice.
Unfortunately on the flip side Sellers are resisting putting their homes on the market until values go back up, so the selection of available properties is low.
This is a great market to learn patience in. :-)
  • July 30 2010
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Profile picture for Lady Chattel
"If it was a fixed economy then I guess we would be nationalizing and borrowing from the federal government directly"


Uh, isn't the FEDERAL GOBERNMENT backing 97% of all mortgages in the US.......by them doing so they effectively make it possible for anyone with a pulse to still buy a house......this is another way of propping up house prices and trying to avoid the inevitable.

Reminds of this classic song....

"I think I'm turning Japanese,
I think I'm turning Japanese,
I really think so"

Catchy tune eh.....
  • July 30 2010
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Profile picture for Mr Caveat
Some buyers think the market still will go down even further. A loss of their job concerns some as well. Overall I believe its just a lack in consumer confidence with what's happened in our econmy the past several years.

heh yeah the rubes! thinking they can out-think their job-loss and the fact that the housing markets still tanking!!!

RE: ' Pasadenean ' Needs basic Econ 101 , and the basis of any free economy ' caveat emptor ' let the buyer beware . Agents provide current market anaylsis based on this free economy . If it was a fixed economy then I guess we would be nationalizing and borrowing from the federal government directly ,

WHO needs econ 101? you don't even know the difference between a type of currency (fiat) and a system of government(wth?)! and no, let the buyer beware is not the "basis" for anything. unless your definition of a "free" market is one that is so unregulated that nobody has any recourse for anything.

"a stitch in time saves nine"...  who darn's socks anymore?

always wondered what that meant!
  • July 30 2010
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Some buyers think the market still will go down even further. Alos loss of their job concerns some as well. Overall I believe its just a lack in consumer confidence with what's happened in our econmy the past several years.

  • July 30 2010
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Profile picture for Reallyfedup
"It is a business and they do need to put a positive spin and a bad situation.."

My mistake Pasadenan,

I meant to say:

It is a business and they feel they do need to put a positive spin and a bad situation...
  • July 30 2010
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RE: ' Pasadenean ' : Needs basic Econ 101 , and the basis of any free economy ' caveat emptor ' let the buyer beware . Agents provide current market anaylsis based on this free economy . If it was a fixed economy then I guess we would be nationalizing and borrowing from the federal government directly , and everyone would be paying the same for there homes with no improved value . ' For the people by the people ' ; and the basis of free enterprise is not set , fixed , or controlled . Realtors sell real estate , not loans . Homeowners improve homes for resale , not Realtors . The lay-offs and unemployment is the reason peoples' confidence is down at the moment on the mainland .
  • July 30 2010
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Profile picture for blank screen EXILED
"It is a business and they do need to put a positive spin and a bad situation.." -

You see, that has been the whole problem the whole time... there is no "bad situation", it is all in the minds of these agents looking for suckers.  And there is no reason to "spin" anything.  All spinning does is make it look like you can't see straight.
  • July 30 2010
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Profile picture for Reallyfedup
Docolan, Dunes and SoCal,

I for one as an agent appreciate the manner and tone in which you have expressed yourselves here.  It's much better to respond to, understand and comprehend, and accept.  All the name calling and blame doesn't do any good except cause knee jerk reactions, so thank you for your answers and the manner in which you responded.

I would also agree that agents that spew all the best time to buy blah blah blah really need to tone it down quite a bit.  I would also say that I really don't expect them to run around yelling the market sucks either.  It is a business and they do need to put a positive spin and a bad situation, but lets knock it down a few notches.  Tell it like it is and don't BS the buyers.  Both buyers and sellers need to step it up a little when choosing an agent as well.  Ask around for an agent that you are comfortable working with, call them out on their BS, ask questions.

One issue that I must address though is the blame thing.  It's the lenders fault for approving the loan, it's the governments fault for giving away money, it's the agents fault for spreading NAR propaganda.  I don't see the buyers fault in there anywhere.  Where is the buyers accountability?  Everyone has their slice of the pie.  Buyers agreed to pay a 30 year mtg. not pay for 2 or 3 years and then walk away if things turn bad.  I have seen plenty of sellers do a short sale that own other properties and have other assests.  Many were investors that bought rental properties as a business and now just want to dump them.  That's all on them.  They need to be held culpable but they are not, they just walk away from it and write it off as a business loss.

Anyway, Dunes, Sunnyview, SoCal, Dacolan and those like you, keep the comments and responses coming.  It's those like you that keep agents on their toes and are needed in these types of forums.  I look forward to further discussions with all of you.
  • July 30 2010
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Profile picture for Dunes....
Pasa..I appreciate hearing your OPINION in response to my OPINION...
  • July 30 2010
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Profile picture for blank screen EXILED
"Does not each person have a Responsibility to be honest about their role in what happens..."  -

If people were not a product of a combination of their genetics, environment, and choices, that would be true...

But societal brainwashing has a much bigger impact than we imagine, and addictions started by false beliefs are very difficult to break.

Outlawing all advertisement would help, but it won't solve the problem.

Don't know if you've looked at the issues of "negative self talk"; but most of it stems from "grandma-isms" that appear to be true on the surface, but are really over-simplified lies (half-truths) to get people to conform to a mold and trap them from seeing other possibilities.  And some of them are completely obsolete... "a stitch in time saves nine"...  who darn's socks anymore?  they just buy them in bulk for 33 cents each, and use them as rags when it needs a stitch.
  • July 30 2010
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Profile picture for Dunes....
My opinion
Nar Blows, Reotards, yadda yadda....

Perhaps we (the Public) are just as guilty...Does not each person have a Responsibility to be honest about their role in what happens in any thing they do that can impact their life or their Family..Whether it be Drugs, doing a crime, gambling, Drinking... whatever?

Why would Business Transactions be any different, especially one that is usually the Largest Financial Obligation they will participate in...You know, ask questions, become informed, be Responsible to themselves and their Families?

I think if you check or get feedback from Agents who know me you'll learn I have shared my opinion once or twice on NARs Talking Points, Data, Claims, Advertising, the Quality/Qualifications of Agents, Lenders, the BS of Gov.., the Recruiting of the Bottom of the Barrel Agents by Trulia and Zillow to make a Profit at the expense of the Consumer ..I'm not a Fan

Trulia and Zillow are not Pro Consumer or Pro Agent, they are Pro Trulia and Pro Zillow....

Maybe it's time to lift the needle of the skipping Record of "Reotards"  & Nar Blows, by us and the Good Agents to step up..

For example..You, Socal, Me, Sunnyview, whoever should not ever have to address or flag a Spammer or a BSer Agent..Every good Agent should be there immediately...sticking up for the Consumer and their Industry, career and Profession...Pointing out the Spam and protecting the Public from that crud, representing their industry in a responsible pro-active way..

We've done this discussion and the NAR, Reotards, it's everybody's fault except mine cause I'm so smart thing for years now..What's changed? Who's been helped? Where is the Public?, Where are the Real Questions from the Public?..
Trulia & Zillow do their best to attract Sleeze Agents and we wonder why there are so many..I have no money or credit or job...Who will help me buy a $300,000 home..
It's because they know that on these sites (T & Z) they will get a ..Oh me oh me me oh call me me me me

Why do serious members of the Public stay away with their Questions...

They know we non-pros are all just babbling the same old crap and the Majority of Agents/Lenders attracted here are selling the same old BS..

Why aren't people Buying...Read a Newpaper






  • July 30 2010
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Profile picture for dacolan
I understand, and even agree to a certain extent, the stereotyping and generalizing of all REAs as incompetent and greedy is inaccurate. By the same token, you have no one but yourselves/colleagues to blame for this perception, IMHO.

There is far too much double-speak, misleading generalizations, manipulation and outright deception practiced by the majority (yes, the majority) of REAs I've encountered personally.

Most claim to be market experts, while simultaneously claiming they didn't see the bubble implosion building/coming. (Before anyone claims no one saw this coming, you may want to do a little research. These very forums offer plenty of evidence to the contrary.)

Where does all the NAR bashing stem from? "There's never been a better time to buy." (this prolific line has been used from the early Oughts through the peak and right up to today, although admittedly less often these days) "They're not making any more land." "You're throwing your money away renting." "The RE market always goes up." "Buy now or get priced out forever." etc.

Like SoCal points out, the market will become stable and sustainable only once NAR stops lobbying for gov't handouts that act as artificial props, and lending standards need to be tightened up. In addition, unemployment and incomes/wages need to improve, delinquencies and foreclosures need to be liquidated and rents/vacancies need to stop dropping/increasing, respectively.

Bottom line, affordable housing is fundamentally based on and directly tied to incomes and rental equivalent alternatives. Interest rates alone are meaningless, and using emotional appeals to fear ("why are buyers afraid") will do nothing to stabilize the residential RE market, much less improve the damaged perception of the REA profession.
  • July 30 2010
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The reason buyers are afraid to buy is because they don't want to go through the paperwork, everyone is afraid of contracts and long term commiments. They are also afraid of rejection from the banks.
  • July 30 2010
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Profile picture for the_country_hick
Mick, since you asked this question I trust you wanted a real reply. Are you satisfied with the reasons you find here?
  • July 30 2010
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Profile picture for workabee
I'm not afraid to buy. Prices just aren't cheap enough so I'm gonna wait no matter what the spintastic NAR says.
  • July 30 2010
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