Why Aren’t Buyers Buying?

I recently happened upon an article on Discover San Diego that explores the risks of not buying in today’s market.  The premise of the article is that we are in a buyers’ market and, yet, real estate is not moving.  There are truisms in this article, namely, that supply exceeds demand.  And there clearly are lots of properties that are priced aggressively.  So, why is the market so sluggish?   I believe there are three primary reasons buyers are hesitating.

Laying in Wait

The market is an uncertain one.  The ice cream cone has not finished melting and people are waiting for a bottom, however vague the concept.  I do believe there is a growing segment of the market that is distressed, however, it is not yet widespread.  There are still owners who are holding onto boom-like prices and their weariness tolerance has not been exaserbated.  There, too, are buyers who are holding out for an all out depression.  In reality, the market will probably level somewhere in between the two extremes which brings me to reason number two.

No-one Knows the Leveling Point

There is no question that the market is leveling itself.  We are coming out of a boom that raised real estate prices to unnatural levels.  This period will bring things back to “normal.”  Another vague concept, especially in California.  Does “normal” mean pre-boom pricing?  I don’t think so, though I am certain there will be losses both in terms of actual cash and in the form of depreciation which brings me to reason number three.

Fear of Depreciation

Buyers are worried that if they buy too high, they may not enjoy the rewards of appreciation.  Real estate is a short term financial investment for some, but for most it is also a long term commitment to family and future, a promise of wealth accumulated over time.  Many fear that overpaying now will not reap the rewards they want later in life, a valid and educated concern.

So, what to do?  The fact is there are plenty of properties that are distressed or depreciated.  All you have to do is watch and study.  Some say this is a buyers’ market, I say this is a complicated market and one in which the cautious will prevail.  Look carefully at the tools available and compare.  Today’s buyer must be an educated one.  This is not the impulse market we have seen in years past.  Watch, wait and seize.  Everyday, I see prime properties selling within days and others sitting untouched.  Look closely at the statistics and you will see why some go and others don’t.  Jump on the hot ones and learn from the rest.