Why aren't people buying right now

Why aren't people buying right now when rents are so high and home prices and interest rates are so low?
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May 02 2012 - Coos Bay
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I think the reason still lies with the banks.  I see clients still having trouble getting banks to loan them money.  I also think that many of us are still a little wary of spending money in this economy.  I have noticed many more houses under contract in my area though, so hopefully thing will change soon.

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May 02 2012
In the Portland metro area houses are flying off the market.  I keep hearing from the local realtors how inventory is so low.  Coos Bay must be a very different market.
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May 02 2012
Markets are different throughout the USA, here in NH if the price is right the properties are selling fast, and inventory is getting lower. 
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May 02 2012
I'm not seeing this problem in my service area.  Properties priced right are being snapped up and I'm getting calls daily from buyers finally entering the market.  The buyers seem to think in the South Bay Area of Los Angeles that we may have finally seen the bottom and they're concerned if they wait the good deals will be gone and if interest rates start rising they may be priced out the the great neighborhoods.
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May 02 2012
I agree with Nick. The Louisville Area is hopping! Our inventory is shrinking  and the prices are finally leveling out. Open house numbers in my company have been fantastic. I have noticed that there is a larger number of first time home buyers. They are ready to get out of the rental game and the low interest rates and prices are helping motivate them. Of course, the banks are cautious of poor credit scores and lots of kids run into the debt to income problem. Over all, I think things are looking up!
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May 02 2012
Profile picture for the_country_hick
Debby, there are a few reasons.

No down payment. That means people can not afford to buy a house.

No permanent job. That means people can not get a mortgage.

Fear of losing a job or having their income cut back. (no added debt to be safe)

When the price has been dropping for a few years why buy now when it could be much cheaper next year?

Regarding low interest rates those can also be a reason not to buy now. If I buy now and move in 5 to 7 years and resell at that time with much higher interest rates at say 8% the price I could sell at would almost certainly be much less than today.

A 30 year $106,000 mortgage costs $493.91 a month at 3.8%.
A 30 year $100,000 mortgage costs $491.94 a month at 4.25%.
A 30 year  $82,000 mortgage costs $491.63 a month at 6.00%
A 30 year  $67,000 mortgage costs $491.62 a month at 8.00%
A 30 year  $56,000 mortgage costs $491.44 a month at 10.0%
A 30 year  $48,000 mortgage costs $493.73 a month at 12.0%

With all of the extra money printing done recently many of us can see 10% or higher rates as a definite reality in the next 5 years. Seeing incomes rise much is not as likely to happen. If my monthly payment ability does not increase interest rates will change pricing drastically.

Do not forget that when renting you can do nothing more or less than come home, eat supper and relax. When you own a house you must do whatever it takes to keep it up. Sometimes the extra costs involved in owing a house make the cheaper monthly payment more expensive than renting.

Being free to move when desired is also a benefit.

Having said all of the above when someone is secure in their job and they think the numbers work they will buy a house if they will be there long term..
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May 02 2012
Certain price ranges are moving very well in the Tulsa area, in the median range (roughly, 100K to 250K) we have a four and half months supply. While some are ready to start saying "seller's market" I am reluctant, since I think we have more foreclosures to come, and many people have been holding off selling waiting for a better market. It just seems like from my newbie perspective that while things are better economically, and I do believe we are going to see more buying and selling, I do NOT really believe any of that will translate into significantly higher prices.

more buying
more selling
level prices

I disagree somewhat with Dan, I don't think future higher interest rates will translate into significantly lower prices. I just think it will mean many people will get less house for the money, much as the low rates are allowing people to buy homes they could never have dreamed of owning before, now.
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May 02 2012
Profile picture for sunnyview
Every local area is different, but I do see people buying in my area. The houses that seem to be sitting where I am seem to be overpriced in comparison to similar homes, at the top of the market or are in outlying rural areas. A lot of people are happily getting off the fence when they see what they are looking for.
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May 03 2012
Oh,  sales are really up here as well and certain price ranges are flying off the market.  I just wondered why there are still buyers sitting on the fence out there.  Loans are easy to get if you have good credit and the inventory is still good.  Lots of homes to choose from.  At this point in history I just don't understand why any one who doesn't currently own a home with good credit is hesitating.  Rents have gone up so  much it just doesn't make sense.
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May 03 2012
Profile picture for SteadyState
Housing recovery is wishful thinking at best and outright misrepresentation at worst. Yes there are pockets where housing does a sinusoidal wave around a mean value but the mean is not going anywhere till:

* College graduate unemployment remains this high (about 2X national average: > 16%)
* College debt approaches manageable levels (research the link - graduating students debt is approaching $1T)
* Aging US population
=> Household formation is stymied and will remain low for the foreseeable future.
=> Artificial low mortgage rates is only prolonging the pain and not allowing the correction to happen once and for all

The NAR should lobby to rapidly increase rates and let home prices fall. This will result in much lower/affordable home prices and REAs will turn smaller commissions per homes but sell more homes as going into and out of homes will not be such a financial burden. (Right now it appears to be a winner take all REA market - 1% of REAs do most of the business . If the volume increases the 1% cannot physically handle the load so there will be more agents able to make a living and take care of their families). But higher rates will not happen soon - the banks will get clobbered!
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May 03 2012
1. They are too busy voting for America's next Idol.

2. They are squatting in the abundance of empty, broken lock-boxed homes around the country.

3. They can't seem to get down to number 5 on their to-do list.

4. They have left the country. For good.

5. They have a restraining order from the National Consortium of HOA's

6. They are using a different agent.
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May 04 2012
LOL,  I love your sense of humor!  Who did you vote for on American Idol?
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May 04 2012
Waiting for prices to go l-o-w-e-r . . . .
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May 04 2012
actually, in my area, people ARE buying now..............some homes are selling in a matter of days.....some getting multiple offers.......April was an extremely active month......what the future holds, time will tell
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May 04 2012
I'm not finding that in my area of service (Nassau County).  Homes that are staged and priced correctly are moving.  The majority of buyers I'm working with want "move in condition" meaning updated kitchens and baths.  Lack of inventory for these homes is creating pent-up demand.
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May 05 2012
Profile picture for kpbt
  • kpbt
  • Contributions:16
Listing agents do overprice homes and do not give sellers current market values.  Sellers believe that the listing agent is correct and if they got an appraisal of their homes worth they would realize that the house is overpriced.  Maybe listing agents should lower their commission when they make these errors rather than hide it and have the seller believe their price is fair.  Buyers are not going to buy a house and instantly be underwater.
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May 05 2012
Overpricing a home is a waste of time both for the seller and the agent.  It is our duty to be honest about market values when we talk to a potential seller.  The facts are the facts.  It is only the truth that will let a seller make an informed decision about what they should do.
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May 05 2012
Profile picture for hpvanc
Buyers are finally taking a long term view of the financial consequences and benefits to buying versus renting.  While prices and rates are lower than a few years ago, both are a symptom of the lack anticipated general economic inflation and wage growth.  This is also an indication that the outlook for appreciation versus depreciation is 50/50.

For buyers that have a low down payment and/or have a hunch that they may need to move in less than 10 years.  The logical long term view in a low inflation economy with the volatility in the job market, makes renting more attractive unless the short term cost of renting is more than double the short term cost of buying.  While agents believe all real estate is local, the general economic factors tend to be national, and the current ones are the drivers of the real estate markets nationwide.

In other words they are weighing the risks, and almost everyone knows someone where owning a home is a huge financial weight around there neck.  They just don't want to risk there careers, financial and family relationships for the sake of . . .

Housing is currently an ok deal in many locations for those with high down payments of 50% or more, and those with a moderate down payment of at least 20% that are settled for the long term. 
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May 05 2012
Profile picture for kpbt
  • kpbt
  • Contributions:16
I still know that some sellers are made to have unrealistic expectations because they do not know the market value independent of their agent. Sellers should check the ratings of the agent they do business with and no rating at all is something to be cautious about.  I wonder if new agents use the unrealistic priced listing to bring in customers for other homes that they know are priced right?
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May 05 2012
I'm sure they do.  We call it buying the listing here.  Agents will take an overpriced listing and just use it to flip buyers to other homes,.
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May 05 2012
 
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