We have been in a buyer's market for more than a year now. Since the buyer's market began, buyers have gained leverage over sellers in negotiations.
Over the past few months that leverage has grown even more substantial because sales have continued to decline while inventory has risen. The problem now is that as inventory rises, sellers have put a lot of "junk" houses on the market. These houses that are in poor shape are usually listed at or close to the price of homes that are updated. Many of these "junk" homes are unrenovated investor properties or foreclosures. Since most homebuyers look at the cheapest homes in a neighborhood first, they are forcing the owners of updated homes to list their properties at or close to the price of the homes in poor shape. This again plays to the advantage of buyers that are actively looking.
In my opinion, this winter holiday season will be the most optimal time to buy this year. This should continue until about February of 2008. We may then see a slight bump in home sales as the spring season nears. For those in the market to acquire a home at a discount, the slow holiday season is the best time to make a deal.
Real Estate Do It Yourself
Wednesday, October 17, 2007
Buyer's leverage increases
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2 comments:
How long do you think this buyer market will continue?
Although I agree that this is a buyers' market, I disagree with the notion that this buyers' market is due to "junk" houses on the market. There were plenty of "junk" houses when this was a sellers' market and that's what made housing renovators (flippers) successful; renovation + appreciation + low interests = profits. The market is dropping, because there is less money available to buyers. It's not that there is too little money available now, it's that there was too much money available during the the boom due to low interest rates and an aggressive mortgage industry. That aggressive mortgage industry issued many adjustable rate mortgages. The peak of those adjustments will happen in 2008 leading to a even better buyers' market, well at least to the buyers who have access to money. That's just my opinion and I appreciate the opinion that started the discussion.
Kenny Cudworth
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