The percentage of US buyers indicating that now it is a “Good time to buy” has shrunk to about 37% versus the 45% of the previous quarter and the almost 48% of Summer 2017. People are less ready to buy because they feel rushed and cannot make up their mind. This is the outcome of the “Home Survey of Consumers” run by the National Association of Realtors.
The information was presented by Dr. Lawrence Yun, Chief Economist and Senior Vice-president of the National Association of Realtors, during his keynote speech at the 12th Annual Global Conference in Sarasota. In many markets across the country, inventory keeps declining. There are just not enough houses available.
Therefore buyers are disoriented. They usually expect to see at least three houses and then make up their mind about which to purchase. The reality is that there is maybe just one home available for showing and they’d better make an offer immediately, otherwise it will be gone. This is fairly common in several areas in Florida as well.
A Market Which Is Getting Too Competitive
The situation is building a very competitive market where buyers feel rushed into making very important financial decisions. They are not ready to commit to a house in just one or two days. They know that prices will keep rising, but they don’t feel comfortable running at this speed. Therefore they are starting to back-off from the purchase process.
Global buyers have the same problem. They expect to see at least 10 houses before making a decision and they feel very disappointed when they can’t. It is a difficult situation for professionals alike. A typical house will collect multiple offers in the very first days. Maybe 10 or more. This means that 9 of them will be rejected and the Realtors who prepared those will have simply wasted their time.
The down-trend in the willingness to purchase has been constant for the last two quarters and will continue until the situation eases off. There are also other factors at play. Bidding wars can raise the purchase value well beyond what the house will actually appraise for. Therefore buyer’s are not able to secure a loan unless they are willing to pay for the difference. Houses get back on the market. Now the sellers are disappointed. And will remain so because now they have too high expectations.
Not to mention that a house which comes back on such a competitive market is likely to be labeled as “problematic” even when it is not. But this presents opportunities for global investors who can pay cash and don’t have to worry about appraisals. They just need to learn to learn to act fast.