If It's "a Buyer's Market," Why Is No One Buying?

[The Masked Tulip]

It is about the US.

"In the initial stages of a depression, sellers cling to an illusion about what their property is really worth. They keep a high list price on their house, reflecting what it was worth last year.... At some point, a few owners cave in and sell at much lower prices. Then others are forced to drop their prices, too. What is the potential buyer’s psychology at that point? 'Well, gee, property prices have been coming down. Why should I rush? I’ll wait till they come down further.' The further they come down, the more the buyer wants to wait. It’s a downward spiral."

http://www.elliottwave.com/freeupdates/archives/2011/01/27/If-It-s--A-Buyer-s-Market--Why-Is-No-One-Buying.aspx

[catmandu]

It is about the US.

No it's not - it's about human psychology - it applies to everywhere. It applies to me as well as I can buy but am not.

[ccc]

The majority of those I hear saying 'It's a great time to buy' are those trying to sell a house. Not those looking to buy.

[Charlie The Tramp Returns]

In my area very few buyers are buying because many potential sellers are not selling although prices are down to 2004 levels. Much to my surprise new builds especially 4 bed detached houses are selling for IMO exorbitant asking and selling prices £489k.

[exiges]

It's not a buyers or sellers market right now, it's a widening stand-off

[zebbedee]

It's not a buyers or sellers market right now, it's a widening stand-off

Aint that so, I'm not buying because I think that the sellers are taking the proverbial with asking prices, take the example in York

http://www.rightmove.co.uk/property-for-sale/property-17512951.html

PB tells be they have been after shifting it for 145 weeks (thats right 2 and a half years) but what have they done, raised the asking last year and changed estate agents this. What, you think you can do a poxy make over and then ask me for £165k for a 2 fecking bed terrace-WISE THE F UP.

Until sellers realise that buyers have wisened up and realised thier shoe boxes aren't worth what they once were the market will remain stagnant, the job losses and forced sales should see the end of the beginning. And being a proper little capitalism I'm looking forward to taking full advantage of these dumb a55 sellers follishness when the time to strike is right.

[_w_]

That's why I am holding on. We are only getting to the fear stage - there's lots more drops ahead.

I think you are spot on.

[Priced_Out_GenXer]

I was having a discussion with my dad about this only the other day. He is of the opinion that the lack of activity is because there is a lack of mortgage finance - big deposits required, relativity high IR's especially on fixed term mortgages etc. This is true, of course, and there is always a seasonal slow down in winter, but I think it's more about affordability / value for money (lack of it) and sentiment (people expect prices to fall further). What do others think?

Edited January 31, 2011 by monstermunch

[Eddie_George]

We need to educate sellers. If buyers want ten or twenty percent off, why don't the sellers demand the same off when they trade up? Once they get that, then the crash will come.

[Realistbear]

It is about the US.

http://www.elliottwave.com/freeupdates/archives/2011/01/27/If-It-s--A-Buyer-s-Market--Why-Is-No-One-Buying.aspx

I am not buying because the houses I am tracking here in East Sussex have only started to drop by 5 figure amounts. Supply is rising and prices are falling--a good time to wait and not try to jump in too early in the downward cycle.

Local EAs admit its because buyers are waiting for more stress in the marketplace and Brighton area is going to be hit hard by the cuts as it is not far behind Oxbridge for government paid employment.

[bobthe~]

I was having a discussion with my dad about this only the other day. He is of the opinion that the lack of activity is because there is a lack of mortgage finance - big deposits required, relativity high IR's especially on fixed term mortgages etc. This is true, of course, and there is always a seasonal slow down in winter, but I think it's more about affordability / value for money (lack of it) and sentiment (people expect prices to fall further). What do others think?

There are also a lot of people sitting on a tracker mortgage where the rate is 1.5% or less. If they are looking to move, then they are faced with a rate perhaps 3 times what they are currently paying. It is a disincentive to say the least, to have your payments going up threefold, on top of finding the extra money to have a significant improvement in the place they are buying.

Or if you are sitting in Neg Equity, you can't move anyway (without finding a chunk of change on top of all the expenses), and while there are those who can find that kind of money, I suspect not enough to make a difference.

[athom]

In my area very few buyers are buying because many potential sellers are not selling although prices are down to 2004 levels. Much to my surprise new builds especially 4 bed detached houses are selling for IMO exorbitant asking and selling prices £489k.

to people with 50%+ deposits from their last houses equity, who got what they were asking and don't expect their next house to be discounted either. What i don't get is who is buying the old houses further down the chain. How is the top end of the market moving without the lower end? I thought that wouldn't be possible but it seems anything is in this new paradigm.

[awaytogo]

It is about the US.

http://www.elliottwave.com/freeupdates/archives/2011/01/27/If-It-s--A-Buyer-s-Market--Why-Is-No-One-Buying.aspx

House buying thought has gone from

BUY NOW OR YOU OR YOU WILL NEVER GET ON THE LADDER ,

to

Theres no rush the ladder has changed into a Snake.

[arrgee1991]

I was having a discussion with my dad about this only the other day. He is of the opinion that the lack of activity is because there is a lack of mortgage finance - big deposits required, relativity high IR's especially on fixed term mortgages etc. This is true, of course, and there is always a seasonal slow down in winter, but I think it's more about affordability / value for money (lack of it) and sentiment (people expect prices to fall further). What do others think?

Lots of reasons for inactivity

1. Optimistic Asking Prices

2. Mortgage Availability

3. High Stamp Duty rates (particular to London/SE where lot of sales are at £250K plus)

4. Low Interest Rates

5. Threat of Unemployment

Low volumes will continue whilst all the above are present.

Sales that are agreed often fall through, and the length of time properties spend on estate agent's books has increased.

Forced sales will be the catalyst to getting things moving again. Right now, people who don't have to move/sell don't.

As stated earlier it is neither a buyer's nor a seller's market, it is a stand off.

[Bobajobbob]

It is not a buyers market in my neck of the woods. It is not a market at all at the moment. There is very little for sale and what is for sale is overpriced, in my opinion, however the lack of supply means that any good houses go under offer quickly close to or over the inflated asking and the rest do not sell at all.

Those houses going under offer frequently come back on shortly after however the myth of stable prices is maintained by agents who maintain that houses are selling quickly at or above asking.

Those houses not selling linger indefinitely with minimal price reductions if at all. Some are removed from market and relaunched at the same or higher price. They still do not sell.

Prices will not fall much until there is a greater level of liquidity and more transparent transactions. We are currently in a similar place as the CDO market in the states a few years back where sellers are able to synthetically values their houses at whatever rate they like and are frightened to find the true value as this will only escalate the collapse.

[Gigantic Purple Slug]

Prices will not fall much until there is a greater level of liquidity and more transparent transactions. We are currently in a similar place as the CDO market in the states a few years back where sellers are able to synthetically values their houses at whatever rate they like and are frightened don't need to find the true value. as this will only escalate the collapse.

Corrected for you.

[Bloo Loo]

Its about Government subsidy for defaulters.

[Bobajobbob]

Corrected for you.

Fair point.

[catmandu]

Many people have told me recently that it's a buyers' market. They are right in the sense that a buyer will have no problem buying any house at asking price. But of course that misses the whole point that asking prices are well above real value for properties now. That's the simple misunderstanding. The real buyers' market will come in due course. Taking a looong time though.

[AndyAndy]

I was going to post something about houseprices coming back to a sensible level round me. But then I sense checked. Good Size four bedroom house was going at £450k at peak. They are now pitching in at about £350 - 360k with the lunatic fringe still holding out for £450k or even a little more (and how anyone can leave a house on the market without any viewings for 3 years and think thats sensible is beyond me). But compounding at 3 and 4% growth from 2001 prices says they should be round the £260 - £290k mark so still some way to go if you take what is in my view sensible growth as a marker.