Tuesday, February 19, 2008

Sidelined Home Buyers Frozen by Fears

I caught this article today: Sidelined home buyers frozen by fears.

There are a couple great quotes that sum up the current lack of buyers:

"Rochelle Getzler, a housewife in Nassau County, outside New York city, and her husband, Abraham, have been on the fence for nearly a year, waiting for an opportune time to buy.I think it is too risky to buy right now," she said. "Yes, prices have come down, but they have come down from extremely high levels."

""I think home prices are going to continue falling, so I see no compelling reason to buy a home right now when we can hold off and buy at a lower price later this year or early next year," she said.

Economists tend to agree. Housing markets in some parts of the country will suffer drops of more than 30 percent before the housing crisis is over, according to a report in December by Moody's Economy.com."

""The economic fundamentals in housing are weak and I see no sign of a bottom," said Chris Mayer, director of the Paul Milstein Center for Real Estate at Columbia Business School in New York."

These quotes all pretty much sum up my current position for buyers. I see two strategies to play:

1. Offer X% lower than current asking prices, X being wherever you see the market bottoming out in the next 2-3 years.
2 Wait for signs that prices have stabilized, and might increase again, and start making offers then

Has anybody made any offers recently that were > 20% off asking price, and had them accepted?

10 comments:

elneal said...

don't know if i'm exactly "frozen by fear" more than waiting until it makes sense to buy.
I'll probably wait for 6 months to see where we're at before any offers.

PDXOutsider said...

i agree neal, until i see things stabilizing i don't see any point in jumping in only to see the market continue slipping.

Perplexed said...

My brother is in the market for a condo but is hesitant because of the market. He is retired and paying cash, every nickel is very important. I am asking him to start looking so that he can develop a comfort level about floor plans and developments (HOAs).

yamyam said...

Right now, any condo purchase is financial suicide.

bearlee said...

Even optimist folks like Charles Turner at portlandrealestateblog.com says condos are going to take a big hit.

Just think, over 1,000 empty condos in downtown/SoWa/Pearl/Alphabet with more being finished this year. Add the credit crunch and POW! I see prices dropping at least 25% and a lot of bank auctions.

Cash is king. He is sitting pretty. Just be patient.

Perplexed said...

I haven't done any formal analysis but the inventory of condos listed for $250,000 with parking on MLS in the core area is very stable. Were I to guess - the more expensive units are the ones taking a hit.

Sometimes I wonder if the real deals aren't 'pocket listed'.

Patient Renter said...

"2 Wait for signs that prices have stabilized, and might increase again, and start making offers then"

The only thing to keep in mind is all deflating bubbles, including housing bubbles, historically go through several "dead cat bounces". We should certainly expect a few of these and not jump the gun the first time prices appear to have leveled off. Still thinking historically, true housing bottoms are several years wide (check Shiller's research), so being patient is prudent.

PDXOutsider said...

"My brother is in the market for a condo but is hesitant because of the market. He is retired and paying cash, every nickel is very important. I am asking him to start looking so that he can develop a comfort level about floor plans and developments (HOAs)."

perplexed, i would tell your brother to wait. tell him to check rental rates vs. true ownership costs for condos, and if renting is cheaper stick with a rental.

i almost bought a condo in ann arbor, MI in 1995, during a glut of building. 3 years later i sold my house for 33% more, the condos were selling for the same of less.

wait. you've got lots to lose if you don't.

any condo experts out there? i haven't been paying attention other that to stay away, but i need to look into them.

Anonymous said...

So, has anyone made an offer 20% below the asking price and got accepted?

Patient Renter said...

"has anyone made an offer 20% below the asking price"

20% is not nearly low enough. Maybe 40%.