Despite the persistent howling of self-aggrandized political prognosticators, the real estate market is still a numbers game.
After more than three years or market corrections, the market is still affected by the most basic laws of supply and demand, and not by the pontifications of media experts.
Job losses reduce demand. Inability to secure credit reduces demand. The lack of saving for higher down payments reduces demand. Until these fundamental economic conditions are adjusted, demand will likely remain low.
Increasing the available pool of ready, willing and able buyers is the key to market stability and eventually, a long term recovery.
People need a place to live. Demographics will always dictate the underlying need for housing.
The challenge is to economically equip them to do so!
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Simply put and well said. Due to the economic downturn, many have moved in with family or friends because they can't afford to live on their own. The homes did not go anywhere. So therefore, we have an oversupply. As soon as people can stand on their own two feet, they can move out again. Who really wants to live with their mother-in-law anyway?
What do you think will happen to values in the future....should we buy now when things are so bad?
That is the most common question form we get. We tell folks that they need to look at their PERSONAL ECONOMY, not the local and national.
If they like the area and are secure in their job for the next 5 years ....go ahead.
We bought our first house at 13% and our second at 16%...didn't matter then or now.
If you can make the payments and your other obligations...do your homework then buy.
Only God knows the future.
Richard,
Excellent point...I think the demand would be there if, I like you said, people had the capability of exercising their desire for the product. But with financing guidelines tight and down payment requirements inching up, people are just not prepared.
We have be pushed and shoved into be a culture that doesn't save by the lure of easy credit. Now we are being condemned and shunned for having no savings. (SLAP TO FOREHEAD)
I somewhat agree, except that I have seen short term swings in activicty with good and bad news in the press.
If we could all look into the crystal ball and predict the future, we would all be millionaires. Statistics are all we have to go by. It is just that this is going to be more of a long term recovery that we all anticipated.
Very well put Richard, if you can't borrow, you can't buy simple as that
Richard, This is a fickle market when the talking heads say we are recovering - the numbers speak volumes in the other direction.
Richard - So logical. Addressing the issues to provide an economic basis for home purchase (and retention) is key.
As was said a few years ago....It's the economy stupid.
You are right about there being 3 years of market correction. Inherently the supply and demand problem is the key. It is interesting to watch different areas recover at different times based on jobs and local businesses.
I heard Lou Dobbs on Fox News last night talking with Sean Hannity. He was saying that one of the biggest problems right now with our economy is the media talking it down. People become petrified to do anything like buy homes, start businesses, etc. Goes right along with what Steve (#2) above said. The only real economy that matters in home sales is your personal economy.
Yup, doesn't matter how low the interest rate is or how good the home deal is, a "buyer" must have the means to take advantage and become a home owner. And saying "it's getting better" doesn't make it so.
I don't disagree with you, Richard, at all...the qualified folks have to be able to get financing, there have to be jobs in the area, etc.
However, I also agree with #11 and #2....because in our local area, we do seem to have a plethora of well qualified individuals, simply because of where we are located (and heaven knows, the government surely isn't shrinking), but many of those well qualified folks cannot seem to pull the trigger because they are concerned and worried about the future...and much of that fear is driven by the media.
Richard that is one of the most lucid well thought out explanations I have ever read. Thanks for sharing it with us.
The market will have to correct itself with the help of a really strong economy starting with companies hiring. We could have a long wait at the rate we are going.
Smoke and Mirrors, and when they tell you to never-mind the man behind the curtains, leads to disbelief.
We see anemic growth here. Celebrating, in the local media. that we have dropped to 10% unemployment is a red herring. When is 10% unemployment cause for celebration in the media?
I would expect pitchforks and torches. We are still on a raft hoping for an island.
Richard, that is just getting down to the basics and absolutely true.