Buyers stay on sidelines of housing market

By Melissa Wirkus

The market is undoubtedly slowing, and many people are finding they want to wait and see where the market is going before they decide to buy.

Although we are officially in a buyer’s market; due to the increase of homes for-sale on the market and decreased price appreciation, many people are still waiting to make their big purchase.

Although the housing market does rely on a lot of hard data and facts, a lot of information released about the market is anecdotal and blown-out of proportion and buyers are becoming speculative and want to wait and see for themselves.
A September 10, 2006 article by Michelle Hoffman of The Los Angeles Times, “Buyers play wait and see,” discusses how many are staying on the sidelines of the housing market until things start to clear up.

The article discusses how this phenomenon is especially affecting the market in Southern California.

“Sobered up from frenzied exuberance over last year's housing gains by this year's declining sales, price reductions and increased housing inventory, a growing segment of Southland buyers are waiting on the sidelines for a significant downshift in prices.”

“Bob Taylor, owner of Bob Taylor Properties Inc. in Highland Park, noticed the change in buyers in May. ‘Unless they can get a good offer accepted, about 75% to 80% of my clients are saying they want to wait up to one year for 10% to 15% price adjustments,’ Taylor said.”

The reason many buyers are waiting is because they think that prices are going to fall very soon. We have already seen some declining prices in a few areas, but nothing really substantial.

“DataQuick Information Systems reported that the Southern California median price slipped from $493,000 in June to $492,000 in July. The number of sales dropped to 24,669 in July, down about 27% from 33,561 in July 2005.”
Many analysts believe prices are going to drop further in the next year or so, so buyers are actually being smart by waiting to purchase.

“With an estimated one-third of Southland properties currently ‘wildly overpriced,’ according to John Karevoll, chief analyst at DataQuick, a La Jolla-based real estate research firm, patience could be a home shopper's best virtue.”
“‘If you're a buyer, there's no hurry at all,’ said Edward Leamer, director of the UCLA Anderson Forecast, which provides quarterly economic projections. ‘Prices are going to be a little weaker a year from now, and there'll be more listings and more choices.’”

The problem with buyers who are “waiting and seeing” is that this market is completely unpredictable, and you can never know where it is going.

We can only get a direction as to what might happen in the future, but there is no way of telling what is really going to happen.

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