Subscribe: “Given the decline in housing prices and the decline in interest rates, housing is much more affordable than a year ago and we still don’t see people rushing in to purchase,” Shilling said. “The price declines are affecting more of the mainstream” than potential job losses.
-DePaul University real estate professor James Shilling, quoted in an article that will appear in tomorrow’s Tribune. (Yes, DePaul has a Real Estate Studies department.)
Although home builders are lowering prices, adding finish upgrades and introducing mortgage protection programs, Shilling says buyers are still worried that once they sign the dotted line, the value of the home will begin losing value. Trib writer Mary Ellen Podmolik likens Shilling’s assessment to buyers thinking of homes like cars, “which depreciate the minute they’re driven off the lot.”
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{ 4 comments }
Of course, the worry of price declines is an issue. But I think jobs and the inability to sell a current home are the main concerns keeping people on the fence.
Take single family homes in Chicago. This is more of a long term purchase traditionally, and in most neighborhoods (not all), steep price declines at this point are less of a concern. Personally, my family is growing so my concern is finding a house that fits my budget in a location I like (less about price declines).
A family NOT buying a house they could really use right now are more worried about their jobs rather than further price declines. Most people I talk to feel (and are excited) they will get a nicer house and nicer neighborhood at better interest rates than when they bought over the last five years … They are not buying because they are either worried about thier jobs or they can’t sell their condo or house for enough (even at a loss) to make the numbers work.
I have three current clients listed that want to buy a single family home in better location for thier needs but need to sell their current homes.
Jobs and the economy are the number one reason for first time buyer hesitation too… Even so, I have a crush of first time buyers in the market due to low prices, the $8,000 credit and low interest rates (and FHA loans are popular too). There is a segment out there that is anxious to buy something they could not afford just two years ago but are waiting due to other economic uncertainties unrelated to price of the home they are interested in.
I would like to echo the sentiment that it is very hard to get enthused about buying when you’re worried about getting laid off and/or your investments falling in value by about half.
I second or third what Eric wrote. Add to the fact that even renting my condo out at a loss is problematic. It’s a no brainer that the less rent you charge, the more likely you will get renters. But I cannot refinance my mortgage because my loan-to-value isn’t what banks want for condos (they raised it to 25% recently). It’s like everytime something happens that could help me — lower interest rate — the banks counter with a move that shoots everyone in the foot.
I think there are some deals to be had in Chicago real estate these days but I can’t remember the economy being this bad in my lifetime.
Its hard to commit to a 30-year obligation with a near term uncertain employment outlook. I know more people out of work than I can count on one hand and its often due to no fault of their own.
Every day I am thankful to just have a job. I’ll be interested in owning when the economy stabilizes but not before.
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