Here’s a frustrating experience that many other real estate agents having right now:
Twice this month, I had ready, willing, and able buyers who were all set to make offers on homes in Eden Prairie. The homes were both in excellent condition, were good values, had good neighborhoods, and were at prices that fit well with recent comps in the area. Both would have done well to go forward with an offer. Both buyers called me up the day after we had looked at the homes. The conversations both went something like this:
“Well, we decided we should wait a couple of years. We just read the newspaper reports about the ‘bad’ market and projections for next year. We are just going to rent for now.”
What’s going on here? I grant you that the market has become a buyers market, but this event is either part of a negative feedback loop or a self-fulfilling prophecy. This event is a regular occurrence for many real estate agents that I know. We all know that the media sensationalizes everything, especially if it is negative. Night after night, we hear negative reports about the “national real estate market.” (By the way, there is no such thing as a “national market.”) No background understanding is offered, and no new insights are given. Why don’t they just straight-out tell everyone that they should not buy a house? Why not just give up the pretense of “journalism?” I thought that journalists were just supposed to report the news, and that they were committed to the principle of “do no harm.” Sure, this is not the market of 2003-2005, but what effect is this sort of negativity having on consumer confidence? I know that the media interviews real estate agents, but only reports the most negative parts of the interviews, and skews the rest of what the agents have to say in order to write the story that they had already thought up ahead of time. If you tell a news reporter one good thing and one bad thing, you and I both know that they will only report the bad thing.
Here are some things that the media will not point out:
- Home ownership title is not the same as a stock certificate. Over the long term, Minneapolis real estate has been an extremely good investment.
- As tragic as the foreclosures are, only a very tiny single-digit percentage of people are behind on their mortgages. Most people are making their payments. Afford-ability is still a a defining feature of the Minneapolis real estate market. According to HUD reports, the average Minnesotan has income that would allow them to support a 34% larger mortgage payment than what is required for an average Minnesota house. That doesn’t offer any comfort to you if you are one of those who are having trouble. Now, don’t get me wrong, foreclosures are horrible, and I would not make light of someone who is in this situation. I don’t have the “let them eat cake” attitude displayed many of our well-heeled fat cat lawmakers who will never have to worry about living in a cardboard box. However, the afford-ability is a bright spot in the picture that doesn’t get reported.
- According to the Minnesota Association of Realtors, the average drop in sale price was only 0.8% from Q2 2006 to Q2 2007. Sales volume only dropped 3.25% during this time.
- REO properties are starting to move.
- There are large numbers of people who are sitting on the fence waiting for the sky to fall. They will jump off their fence and start buying when the sky does not fall, and inventory depletes. I know those buyers are out there, because there is an incredible amount of window shopping going on, and I am seeing about 500 visitors per day on this site alone.
- Rates and prices are good. If you are thinking of buying, you might not find a better time.