Why are Home Sellers
very difficult to find
I have talked about the psychology of
the home seller in the past and why it is still difficult for people to accept
the market price of their home today vs. the price they could have received a
few years ago. But with the large investors coming in to buy up all the foreclosed
homes, the market seemed to be on an upward swing. I warned that this upward
trend would not be able to sustain a long term trend due to many factors.
First the large investors are gone, they
have bought up most of the distressed properties and they have gone back to
their ivory towers.
Second, loans are still very
difficult to find. I was reading an article in the LA Times that said the
average credit score for borrowers is 740. The Banks at this point due to many
factors are not willing to take much risk. Federal rules are a big factor for
that, but also the Federal Reserve discount rate is so low that banks do not
find it a necessity to loan money to make money. As Bloomberg News Reported “American
Banks Stockpile Treasuries”. The banks are buying U.S. Debt, not loaning money.
These banks have so much money they need to put it somewhere. Do these policies
make any sense?
Third, potential buyers still are unsettled
about the economy and even if they could get a loan they are not willing to
take on more debt. They are willing to continue to rent or stay in a smaller
home then make the next step.
All this adds up to a slower housing
market in the near future. The interest rates are so low, you should be seeing
a frenzy of people wanting to buy, and it is just not there. Instead of reading
the statistics, I always tell people, if you want to know how the Real Estate
Market is doing, Drive around your neighborhood on the weekends, do you see any
Open House Signs? Remember All Real Estate is Local.