Excerpts from the nctimes.com – hat tip Eric!
Anyone want to buy a dream home?
Anyone?
With so many homeowners deep in debt, and so many more worried about the national economy, few people want bigger houses at current prices, and without that midlevel demand, there will be no steady increase in prices, said real estate agents and analysts interviewed last week.
In a traditional market, a segment of homeowners, with rising incomes and growing families, would sell their older places and use the profits as down payments on larger, more comfortable homes. But with local house prices well down from a 2007 peak, potential move-up buyers carry mortgages larger than what they could get selling their houses.
Also, local buyers may have a new outlook on housing: With so much uncertainty in the economy, they may decide their current houses are big enough.
Some homeowners have decided they don’t want to move up. Potential homebuyers worry that the national economy is about to get worse and fear losing their jobs.
Others have decided they like their house enough to stay put.
“The whole society has taken a really conservative turn,” said Jim Klinge, a Carlsbad real estate agent who blogs about the industry. “I think there’s a lot of people who, a few years ago, thought they were a candidate to move up, and now they find their house is adequate and they don’t need to move up. Even if they have a four-bedroom and three kids, you might think they were bulging at the seams. They’re finding they can make do.”
Klinge made another point: The move-up market is shrunken, but not absent. In his view, the segment will rebound when sellers lower prices. “Any market that is ‘soft’ is where sellers are overly optimistic on their list prices,” he wrote in an email.
Rancho Santa Fe real estate agent Polly Rogers said she has clients upgrading their houses, but without selling their old properties. “I’ve seen a number of buyers who don’t have to sell their house right now; they’re in a position where they can rent it out for their (mortgage) payments,” she said.
These buyers see low prices and low interest rates, and they want to snag a deal.
Ben Allen spent a year making low, all-cash offers on houses before he found one in 4S Ranch, a half-mile from his old house.
“When nobody wants to buy is the best time to buy,” Allen said. “The house I purchased is an upgrade —- more space for my family.”
Bigger homes mean higher utilities, often higher mello roos, and more house to clean. And as you age, keeping up with a bigger home is harder to do.
Yep. soft market = prices too high. 151 listings in my small town,6 or 7 are priced right. Some have been on the market for 3 years…
I like this graphic that Calculated Risk posted awhile back.
http://2.bp.blogspot.com/_pMscxxELHEg/SgmZmQz11iI/AAAAAAAAFOs/JXh8mO6Nte4/s1600-h/MoveupChain.jpg
It seems that people are reassessing adequate vs. aspirational housing for their situation. As Jim has said of most of his present buyers, they are looking to buy and hold a house long term rather than move up in a few years. A One and Done scenario in many cases. Higher end sellers would do well to get their price right and right now.