HOME BUYERS ARE WAITING … FOR NOW!
When prices are falling, home buyers think that waiting to buy might save them money on the home they want. In today’s market home prices are declining. There are also a lot of homes on the market, especially in our Southwest Florida market. Whiskey Creek had a whopping 54 homes for sale in late April, nearly a year’s supply at current sales rates. Buyers can afford to be fussy. Unless they see the perfect home or a smoking hot deal, they can remain on the sidelines.
Buyers who are borrowing are also waiting for lower mortgage rates. Rates continue to hover in the high 6 percent range. The result is that even in a buyer’s market such as we have, buyers are slow to “pull the trigger.”
Real estate agents are seeing some impressive deals being made by buyers. It is reminiscent of 15 years ago when the first buyers who tiptoed into the soft market got the best deals. We may be entering into a period that will prove to be another historic opportunity for buyers to act! We are also entering into summertime, our “off-season” with slower sales. This typically puts more pressure on sellers and more power into the hands of buyers.
The two-symbol Chinese expression for precarious moments is wei ji. One symbol means danger and the other means opportunity. These are uncertain times. For a buyer with money in the bank, it may be a particularly profitable time to invest in real estate. Few other investment options are a necessity like shelter. Warren Buffet advises that one should invest in what they know. He calls this concept investing in your “circle of competence.” That rules out bitcoin for someone like this writer! Many of us know our homes better than other investment options and we also need a place to live. Other than educating our kids, I can’t think of a better way to invest.
Back to timing. People are often afraid to make a major purchase in uncertain times. The stock market is volatile and certainly lower than its peak. Tariff talks have the entire world wondering how it will pan out. Whispers of recession are heard. The value of the U.S. dollar is down. Safe-haven gold is up. But is gold still a promising investment? Real estate prices are lower than they have been in years; the same isn’t true of gold.
Our advice to buyers is that this may be one of the best times to invest in real estate. Selection is great. Prices are low. Sellers are anxious to deal.
The real estate market is cyclical. It will turn. I wouldn’t be shocked if it turned quickly due to macroeconomic forces, such as global trade deals or peace agreements. But if not quickly, it will change eventually as the cyclical nature of real estate always has. We believe that real estate is a tangible bricks and mortar investment that will continue to preserve and protect wealth and return value as it has for generations.
Is this a Rothschild moment? “Buy low, sell high” is the mantra of making money on Wall Street, but when is it low enough to buy? According to an old Wall Street proverb, the time to buy is when there is “blood in the streets.” Frequently attributed to Baron Rothschild, during the Panic of 1871 in Paris, when everyone else was selling, Rothschild was buying. Others, such as Bernard Baruch and John D. Rockefeller Sr., have also been associated with similar actions. They weren’t afraid to go against the flow.Industrialist Andrew Carnegie said, “Ninety percent of all millionaires become so through owning real estate.” He also believed that more money had been made in real estate than in all industrial investments combined.
If you have any questions or comments about this article or other real estate issues, please contact Bob Oxnard at [email protected].
