Buyers and sellers are aware that the market has been cooling off, though if you go by the soundbites, nobody seems to know why.
From Dr. Shiller this week:
“The market has been very strong since 2012. It’s up 27 percent since March of 2012. It’s been a huge boom,” Shiller said. “The question is what would end that boom? It might continue. This might be a little downward blip and it might continue going up, but you know, I kind of think it’s not going to go up a lot more—maybe 10 percent more—before a correction.”
Shiller said it’s clear something is worrying consumers, and he suggested that perhaps rising geopolitical tensions around the world may be to blame.
“It seems like optimism about housing is weakening,” he said. “Maybe the internationals, maybe all this talk about Ukraine has people rattled. You know, I’ve felt that in the past, that international news affects the housing market. I don’t have proof of that, but something is weighing on the consumers right now.”Meantime, a lack of credit has been a “festering problem” for the housing market, but “inevitable since had a banking crisis,” he said. Credit availability is “not going to correct soon.”
We’ve seen in recent years what motivates buyers to jump – rising prices and rising rates. But it looks like both prices and rates are going to be rangebound for the rest of the year, which will cause more head scratching.
The pundits view real estate like the stock market, and their focus is solely on the demand side – you never hear anybody question whether the home sellers are too optimistic.
It trickles down to the street too, where sellers and inexperienced agents sit on over-priced listings, and wonder what happened to the buyers. It doesn’t occur to them that they can fix their own troubles.
This is where a major break-through could happen if Zillow/Trulia – or anyone else with a national voice – could properly educate the marketplace.
If people embraced the mantra, “There’s Nothing Price Won’t Fix”, at least sellers and listing agents would be in reality. Currently they live in Fantasyland, thinking that they just need to wait longer.
Waiting did work over the last two years as the prices kept rising – eventually they caught up with those sellers who started too high.
But in a flat or slowly rising market, there’s no pressure on the buyers to jump. The chances of a lucky sale are greatly diminished because the long-sitters are only proving that their price is wrong – and it emboldens the buyers to be patient. Sellers can literally cause their own downturn.
The environment changes greatly when a market tops out. Buyers feel like they have waited this long, there’s not much more to lose by being patient now.