Sellers Abundant and Buyers are Scarce

Mortgage Professionals are truly intertwined with the real estate community, which provides us with insight that others are typically not privy too. Over the course of this week I have spoken to numerous real estate agents, title company owners, appraisers, and account executives. All have concurred one thing; that sellers are very abundant and buyers are very scarce. I have broken this down the last two and half days to hopefully lend (pun intended) insight as to why this is the case.

We all know by now that the real estate market is going through a major transition right now. We have had huge lending cut-backs, increased inventory, heightened foreclosures, and delinquencies. This coupled with the overall un-willingness by large wholesale and retail banks to lend money in order to hoard their cash to improve their balance sheets. However, given all the negativity is this the real reason why the market is challenged? (especially in Boone County Missouri) I will offer a couple of "real" ideas at least from my vantage point as to why the market is still struggling to make the turn.

First, the bottom has not hit us yet. Yes that's right it is my belief that we are not at the bottom and perhaps will not see the bottom until the second quarter of 2009 at the earliest. I know this is a tough pill to swallow especially given the two plus years that we have battled through, however it's the truth! Look at the numbers, talk to the experts and speak to the individuals in the market and you would tend to believe this is the case. Second, since we are not at the bottom the buyer's that are out there are hesitant to pull the trigger until the bottom is reached. Why? Because they do not want to buy an already depreciating asset if they can hold out and buy at the homes lowest level. That puts them in the driver's seat and here's the kicker. They (the buyer) know they are in the drivers seat from the word go and patience is a virtue! Third, the buyers that are ready to act now, have something to sell. That's right we have a plethora of buyers that are ready and willing to take advantage of the market as it stands today. However, they cannot get their home sold and off the market. This is why I have seen agents turn down listings in order to keep their marketing overhead low. If it's a home that they know will take some time, needs some work, or a lot of advertising to sell they are simply turning down the listing and who can blame them. Lastly, the market as a whole simply has too much of an inventory of high-end homes. If you have looked at the labor market numbers then you have seen unemployment numbers steadily increase, weekly jobless claims rise, continued layoffs and firings, and big business consolidation. Individuals that could or can afford to buy some of these properties are waiting for the dust to settle to see whether or not they have a job and whether or not their pay is cut.

Please don't kill the messenger but I have always given you honest, candid, and unwavering reality to the market and this is the truth. Time will tell whether or not we can summon more vigor, strength, and optimism to weather the continued storm.

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