This article from Reuters reports that potential homebuyers all over the country are sitting on the sidelines, waiting for prices to come down even more.
Home prices have plunged by 10 percent or more in some parts of the United States and interest rates on mortgages are at enticing levels, but many potential buyers are waiting for prices to fall further. This psychology is helping prevent the hard-hit home market — suffering one of its worst downturns in history — from recovering, just as the spring, the peak home buying season, gets underway.
A buyer quoted in the story says she expects prices to continue to fall, so she plans to wait a year, believing that home prices then will be considerably less.
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.
However, there are rumblings that activity may be increasing, at least in California. The L.A. Times article about January home sales from last week quotes California Association of Realtors chief economist Leslie Appleton-Young saying that agents are seeing an uptick in activity at open houses.
Few people were actually purchasing the houses they visited, though. “I don’t think February will see a dramatic change, but there might be a change in March,” she said.
Whatever activity exists is likely to be concentrated at the low end of the market, according to the story. John Karevoll of DataQuick Information Systems, which reports the monthly home-sales data, confirmed this in an interview broadcast this weekend on KNX-1070. The low-end activity is helping to push down the median price, according to Karevoll.
Since most economists are predicting another two years of downturn, it will be interesting to see whether the February and March numbers are worse, the same, or better.
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