Wednesday, May 30, 2007

'Confused' Potential Buyers Remain on the Fence

From the Sacramento Bee:

Prized species spotted locally -- homebuyers

Now that it's done, Joi Bess couldn't be happier about selling her Rancho Cordova house and buying a bigger one in Folsom...Bess says she still wishes she had made more off the house in Rancho Cordova. But she takes comfort in knowing she got a house in Folsom for $100,000 less than those like it cost two years ago..."Our consensus was if you're going to do something, you better do something now," she says.
...
In what's proving to be a second straight year of slowed sales and falling prices in many neighborhoods, that closing makes Bess a hero to the Sacramento region's real estate trade. She is a buyer.
...
"I wish all the other people luck," she says from the calm of her new house. "I still see a lot of other properties for sale. I remember that feeling: 'Is it going to sell?' It's really a tough game."
...
[Michael] Alexander recently stopped looking -- for now. He cites the sudden crackdown on 100 percent financing due to rising numbers of loan defaults..."It was starting to look feasible," Alexander says. "It was really looking feasible. We talked to a Realtor a few weeks ago, and that's when all the credit issues hit."

Alexander's departure from the buyer pool puts him among an estimated 30 percent of potential buyers who have vanished from area model homes and open houses as the real estate season reaches its busiest months...Alexander says, wherever he looks he sees prices going down. Or he sees that prices are too high and the houses aren't selling.
...
The Wahlstroms, a couple in their 50s, recently toured an Elk Grove condominium complex. Its builder had contracted with an auction company to unload a handful of unsold units. The opening bid for a 1,200-square-foot condo previously valued at $259,900: $149,000.

John and Celeste Wahlstrom looked one over for their 22-year-old daughter, who saw it advertised on television..."But we're not in a hurry," John says.

Part of the reason is uncertainty about where this market is heading. In 2001, the couple bought a house in Elk Grove and more than doubled their investment before selling it. They're not having the same luck with the value of their new house, bought in 2005. "I don't know about the values," says Celeste. "Right now everything is going down."

With that sentiment, the Wahlstroms take their place among thousands of potential buyers whom sales reps for home builders sometimes describe as "confused." Many would-be buyers who have seen prices fall for months are waiting for them to fall more.

Even as agents clamor that "now is the time to buy," they remain on the fence. They're waiting for the bottom of a market that began to weaken in late summer 2005.

8 comments:

Patient Renter said...

"With that sentiment, the Wahlstroms take their place among thousands of potential buyers whom sales reps for home builders sometimes describe as 'confused.'"

With that sentiment, the homebuilders take their place among thousands of potential sellers whom Patient Renter sometimes describes as "Greedy SOBs".

Albert said...

Count me in among the confused. My wife and I moved here 10 months ago, but we've been following the Sacramento market for over a year now. We have made two offers on homes, one in Roseville, and one in East Sac, and for one reason or another, both have fallen through. The Roseville home is still on the market now, 5 months later, and we were outbid on the East Sac home. Focusing now on East Sac and Land Park, I've come to realize that market conditions can vary from street to street.

Gwynster said...

LOL

I just got asked this morning if I wanted to buy a house coming into the yolo market as a fsbo. Why is it being sold? Yep, another dead boomer. I kid you not -

My reply was that I'm out of the market for at least another year or until the market is done tanking.

Cmyst said...

Albert, if you and your wife have only been following the Sacto market for a little over a year, you may not realize that home prices here bubbled up over 100% since 2000. And yet,area wages didn't double!
Sacramento was one of the 10 most over-valued cities in the nation -- I'm not sure if it was Forbes or Money that came up with the list.
Fundamentals do not support the prices here, and most of us believe that prices will drop for at least another 2 years, maybe as many as 5 years.
Areas like East Sac, Midtown, Land Park all have a certain Sacramento mystique that imbues them with an inflated value already.

Gwynster said...

Cmyst, good point.

I always think everyone here has been watching the market for years like us.

I actually think prices really began climbing in 98'as dot.com money started to flow in earnest in answer to the cap gains freebie.

It's always fun to find an area you like and then zillow the neighborhood so you get an idea of what 99 to 01 prices were like.

Gwynster said...

Albert,

I know people that only make offers on homes that are vacant. That way they don't have to deal with sellers who are just fishing for wishing prices.

My new favorite thing is to counter the seller's counter at a lower price. Now that's making friends >; )

Diggin Deeper said...

From AP...

"Economy has worst growth since 2002"

http://news.yahoo.com/s/ap/20070531/ap_on_bi_go_ec_fi/economy_14;_ylt=AuFRZz.7zNAz9XbKaihwh8IE1vAI

GDP in the tank and revised 1 Qtr down to .6%.

Confused? Maybe... but not stupid. One of the mortgage brokers is running billboard ads (Ditech?) that take a different approach. Their theme is that prospective clients are "intelligent". What a concept!

It doesn't take much to realize you don't buy when prices are falling... especially when you're buying a levereged asset.
Confused? Homebuilders and real estate professionals are scrambling to find answers, gimmicks, and fluff to get buyers off the fence. I'd say that's where the confusion lies.

norcaljeff said...

DD. We'll see negative GDP growth shortly.