This can not be good news for the real estate world.
But as long as home prices continue to fall and labor markets remain weak, economists say the low rates won’t be enough to lure buyers and spur a rebound in the housing market anytime soon.
“People’s perceptions of likely future home prices have been altered in a negative fashion,” said Thomas Lawler, an independent housing economist in Leesburg, Va. “People buy a home not just to live in but because it’s an investment. Combine that with a lousy economy and it becomes a lot harder in today’s world to qualify for a mortgage to buy a home than to qualify to rent one for the next year.”
Between 2000 and 2010, the ownership rate, defined as the percentage of owner-occupied housing units to all occupied housing units, declined by 1.1 percentage points to 65.1%, with declines in every region. While the rate remains at the second-highest level since data collection began in 1890, it is expected to continue falling as more Americans choose to rent homes instead of own. via the WSJ
When families opt out of real estate home ownership the system tends to fall apart for the real estate industry. Sure an investor will buy the home, but only at the price that makes solid economic sense. A homeowner will pay more for certain instrinsic value that they will give to the home.
Better schools, near family, great neighbors, that amazing kitchen; these are all factors that can cause someone to overpay for a home.
And the opposite is true. Bad neighbors, outgrowing the home, and families moving are all reasons the house will need to be sold.
Either way there is volatility in the marketplace.That is good for the real estate business as it creates transactions.
But if the homes are owned by investors these are blips on the screen. A tenant moves and there are no commissions created.
This is why the real estate community has to create an environment where home ownership is sought after. Letting the American Dream die will have a ripple effect in our industry that will be very hard to recover from.
{ 18 comments… read them below or add one }
Well said Tom!
Given the current conditions in the market, mortgage rates, home prices, etc… it really can make sense to look at buying rather than renting. That is of course if you aren't upside down, credit challenged, and have a decent job. For those that do have the means though, now is the perfect time to buy.
Ya I agree with you that volatility in the marketplace is really a good place to make trasections…Its really helpful for them in this particular situation…
While there will always be great bargains to be found in a down real-estate market, the WSJ article linked in the post talks about a deeper, more fundamental shift in the housing market. It doesn’t really matter if investors snap up great deals here and there; the vast majority of Americans are either unwilling or unable to buy a home right now and for the foreseeable future.
In my market it's not that the buyer's don't want to purchase homes. It's that they can't get financing. The younger ones have grown up in an atmosphere of spend and spend and load up your credit cards and ruin your credit young. They also haven't learned anything about saving any money. So even though increasingly high rental amounts have forced people to consider purchasing now because it's cheaper and easier to buy than it is to rent, without decent credit or any cash, they can't do it.
The neighborhood and all the things that surround the house or the property on sale are, most of the time, great influential factors on whether the buyer will or will not buy. I absolutely agree with that concept.
Completely agree with Alex. In my market almost all of the sales are by cash buyers snagging up properties.
i think it is just the people are wiser. they weigh things up. the better the option they will benefit, they get..
I agree that people buy homes for an investment not only for them but for their family too. People might pay more for a house just to be close to family or a good school. But if they can’t get a good loan they might not get the house they want. Then an investor will come and buy that house. It would be better for our economy if people bought homes not investors.
Tara keller
I agree with the comments being made. It would be alot better to buy a home instead of renting. When you buy your home you know it will be yours renting only gives money to the landlord and its still the lanlords home. Also, if you buy a home it can be passed down to your children or family members that will need it later on in the years.
Although a I agree with most of the comments, whether renting a house is better than buying depends on many factors, like how long you stay in or how fast prices rise.
I think a lot has to do with the desirability of the locale. I am fortunate enough to work in an area people want to own property. A down market here is seen as a buying opportunity. In Fort Lauderdale, you might as well worry if THE TIDE is coming back. Even so, we see a big difference in the market here based on proximity to the ocean. The East Side of town, near the Ocean, is recovering. The West Side of our County, which is basically a drained swamp, now miles of tract homes, is still struggling.
I've been reading about how home ownership is losing it's appeal, but in the real world I just don't see it as those that can qualify or afford it sure seem to be wanting homes.
Most people I talk to these days are not thinking homeownership is "cool" in fact most are thinking renting is a better choice. It is hard to pick the bottom but I think we are getting close. I like to move against the heard…some of these cities you have in your top ten are looking like buying opportunities especially Phoenix.
If you have the cash, now is a great time to buy. Great deals on bank owned properties and often times a mortgage that is less than a rental payment.
It is undeniable that property seekers or those customers who are ready to purchase may still in doubts. Different side of home owning story might meet them in any part of the buying game. Though this year appear some twists and turns in real estate economy, still, it doesn’t stop investors in Jacksonville homes for sale to fall with some hardships. The said housing program continues to grow as what excerpts from an international lay out reading material. I mean, there are really still good spaces for buyers that want serious and lifetime settlement ahead this year. Well, good to know that numerous real estate campaigns and online discussions gives further information on what a particular real estate company stands for. Now, who would say that home owning is no longer a necessity?
Interesting post Tom! I strongly agree with what economist's think when they said that "the low rates won’t be enough to lure buyers and spur a rebound in the housing market anytime soon." Buyers are wiser now and they are not merely focusing on prices alone. They are more keen on looking into other factors that would spell profits and long-term, surefire gains for their invested money; regardless if it is their first or second home. However, asking around some friends who are so much interested in Smyrna homes for sale, also gives me the impression that there are still plenty of interested home buyers who are willing to take the risk for the sake of home ownership.
I have to agree that there are two sides to every story. Some people might find it unappealing to own a house while others are still looking in the market for Belmar homes for sale to finally settle down. Though there are some who are hesitant there is still a big majority of people who wants to own their house.
People are still trying to make their dream come true like owning a home. I agree that some reasons why a family moved into another place are the communities, location and the crime rate in the area. Choosing a nice location would be a problem because of the higher price, to others renting is the solution.