How Come?

Now, of course, I know this doesn’t apply to everybody reading this here. There’s plenty of you who I’m not talking about…that’s for sure. It’s just that I know that there are some of you who can probably identify with this and for you.. think of this as a gentle call out, a challenge of sorts. You see, I stand at lots of open houses and I talk to lots of buyers. Often I engage in a dialog with you, and in the midst of that dialog I ask a few questions. Sort of like this:

Me: So, how long have you been looking?

You (Buyer): Oh, about 6 months I guess.

Me: Have you written any offers during that time?

You (Buyer): We wrote one a couple of months ago when there was multiple offers and didn’t get it. Right now we’re thinking we’re going to wait for another 6 months or so because we think the market is going to go down some more.

Me: Oh, so you think you’ll re enter it after that’s happened?

You (Buyer): Oh, sure. We think it’ll be a better time then. Prices will be lower. All this negative news right now isn’t good…we’re going to wait.

At the end of the day, and this comes after 20 years of doing this,  here’s what I sincerely believe. The majority of buyers don’t really want or care if they get a good deal when buying a house around here. Oh, they’ll certainly say they do…but it’s all really just smoke. What buyers really want is the security of other buyers that will give them the courage to buy a home in this really expensive area. Most buyers would much rather write an offer $100,000 over the asking price when there’s competition than write one $50,000 under asking when there’s none.

I hope you don’t think I’m joking about this, because this is my sincere observation over all these years in real estate. When it’s soft like it is right now, buyers sit on the fence. They rationalize that they’re prudently waiting for the right time when they’ll re-engage with the market and get a good deal. The truth is that nobody has a crystal ball that will allow them to know when the “bottom” has occurred. These buyers will come back when the market has reignited. I promise.

The buyers who actually do write offers in markets like this one are the one’s that actually do bring values down. They accomplish that because they have leverage. They simply buy when others are fearful…to paraphrase Warren Buffett. Here’s what I know, I have two active listings in Foster City right now. I had probably 100 people through one open house last Sunday and at least 50 through the other. That one has been on about a month and overall we’ve had easily 250 people go through it. That is not a sign of a dead marketplace. It’s actually about the same numbers we had in the first quarter of 2010 when everything was getting multiple offers…folks are just more fearful of pulling the trigger right now. These buyers are not going to disappear…they’re all going to eventually engage. Probably all at the same time!

I don’t know…call me weird, but I think it’s a good thing to buy when you don’t have competition. You may even save money.

Comments

  1. Hm.. rightly said.
    Otherwise known as ‘ Herd Mentality’

    I stopped telling people & friends about the home situation. Its true, the home sales came down but the comparison to previous month is just wrong. Also, we dont have numbers yet just for bay area.
    All those national numbers dont apply and also school season is over.
    Hence market will slow down and prices, I doubt it will come down. It all comes down to job market. As long as people are in jobs, prices will stay at what it is now.

  2. You are probably right, Jim. But what I think also whats going on with most of these buyers are not really waiting for “further reduction’ but rather, they are waiting to see if the area where they are looking of buying a home will and still has the “value” now and in the future. I would be in this mode if I am not sure of the area. I was a homebuyer in 92 and by the time we purchased our home, it took us almost a year looking. Its basically NOT waiting for the price to go down but just finding the Right home. As for long term value, this is Foster City, a great place to start a family..period!

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