Tuesday, January 27, 2009

Why buyers aren't buying, how they can

The National Association of Homebuilders reveals why buyers aren't buying, but the trade group also reveals what's necessary to change that trend.

by Broderick Perkins
© 2008 DeadlineNews.Com
Enter The Deadline Newsroom

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Listings that languish unsold, the credit crunch and expectations that prices have yet to hit bottom are keeping consumers out of the homebuying market, according to the National Association of Home Builders (NAHB).

But the NAHB is working to help change that condition.

Telling it like it is, the NAHB surveyed member builders who responded:

• 91 percent of prospective home buyers say they are staying out of the market because they can't sell existing homes. (Many buyers use existing home equity -- when it's available -- to move up, down or simply buy anew.)

• 88 percent are reluctant to buy because of fears about employment and the economy. (It's the new NINJA -- No Income, No Job or loan Approval)

• 75 percent said that buyers believe home prices will drop more. (This could actually be a dangerous reason not to buy. You'll never see the bottom of the market until the market has already started to move up. Depending upon the pace of the next move up, prices could rise so fast you'll get priced out of the market before you get it. It happens.)

• 68 percent said buyers believe it is hard to get financing. (But not impossible. Learn about mortgages that have survived the crunch.)

• 34 percent said buyers are staying out of the market because they think that interest rates will drop in response to government action.

The percentages add up to far more than 100 percent because most buyers voiced numerous concerns that put them on the fence.

"These results make it clear that Congress must include significant housing measures in any economic stimulus legislation that it enacts," said David Crowe, NAHB's chief economist.

"Traditionally, housing leads the economy into recession and is the first sector to recover. Until we can stop the freefall in home values and get home buyers back into the market, the economy will stay mired in recession," Crowe crowed.

Vote for Crowe. NAHB has the right idea. It's in line with the new President Barack Obama administration's approach to economic ills.

Fix Housing First, a coalition of more than 600 housing-related groups headed by NAHB, is urging Congress to enact several measures that will help get buyers back to buying.

Measures include an expanded home buyer tax credit that does not have to be repaid, mortgage rate buy downs to as low as 2.99 percent for homes purchased in 2009, and enhanced foreclosure prevention measures that will keep families in their homes and prevent additional inventory from flooding the market.

"Builders reported that current home sales are down dramatically in every price range compared to a year ago, but indicated that the declines are most pronounced in the upper ranges," Crowe said.

Sales of new homes priced under $150,000 have dropped 27 percent, and sales of homes in the $150,000 to $249,999 range are down 34 percent.

Sales of homes priced $250,000 to $499,999 dropped 57 percent, sales in the $500,000 to $999,999 range dropped by 64 percent, sales of homes costing $1 million or more were down 56 percent.

Builders are, however, doing their part and adapting to declining sales.

Eighty-nine percent of the builders surveyed said they are building lower priced homes, and 88 percent said they are building smaller homes, a trend that has accelerated since May of 2008.

"Like professionals in any industry, home builders are taking stock of market conditions and adjusting their products accordingly," he said.

"This shift is largely because first-time home buyers are an increasingly large share of the few buyers who are in the market."

© 2008 DeadlineNews.Com

Advertise on DeadlineNews.Com

Shop DeadlineNews.Com

Get news that really hits home for your Web site or blog from DeadlineNews.Com.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the Deadline Newsroom, DeadlineNews.Com's news back shop. Perkins is also a National Real Estate Examiner. All the news that really hits home from three locations -- that's location, location, location!

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

No comments: