Are Are Looking - For What?

March 19, 2009

The reports from real estate agents are that there are many prospective buyers calling about properties, going to look at properties and attending open houses. Many of these prospective buyers have houses to sell; many are in the "if I see what I want" category; others are just checking the inventory are are certain they will be able to purchase what they want for less money at some time in the future. These prospective buyers are searching for a home in which to live, but sometimes the search becomes clouded by the prospects thinking as investors more than as homeowners.

While it has been true that real estate does function as a wealth producer over the long term, a home's primary function is to provide shelter for the owner. Interestingly, however, it is the professional investors who are out purchasing the properties being offered at auction or at the incredibly reduced prices of the present inventory in the Inland Empire. These investors know that real estate markets are cyclical and that over time, these homes will appreciate in value. In the meantime, they find renters and often may have positive cash flows.

So why are the prospective homeowners waiting to make a bid on a home? I suspect that there is a lack of urgency in these prospects. They have seen that prices continue to decline, that the government is offering more incentives and that interest rates are not rising. This strategy has been somewhat successful, but may be becoming less so. The inventory is declining, the competition for the "great" locations and "great" houses has eroded the prospective homeowner's bargaining power.

2009 may be the year of "Coulda, Shoulda, Woulda....But". Perhaps it is time to identify your "buts".