Active Rain July 26, 2010

The Herd Mentality

Let’s review some facts:

  • Prices are down. Way down. Asking prices are so low, as a matter of fact, that some homes are getting multiple bids again.
  • Rates are low. Really low. I just had a buyer close on a 30-years fixed for their home at 4.875%, and the lender was perfectly happy with the profitablity of the loan.
  • Sellers are willing to make a deal. They are digging up oil tanks and making lots of other repairs, throwing in snow blowers, mowers and furniture, paying closing costs, and bending over backwards to pacify buyer demands.
  • Bargains are plentiful. Abundant. Prevelant. Common. Ubiquitous. Bank owned inventory? Lots. Short sales? Everywhere. Updated homes aggressively priced? Check.

So why are we seeing a slow market still? Sure, the pool of buyers has shrunk, but there are millions of able buyers out there sitting on their hands. Why? Is it groupthink? Mass hysteria? A herd mentality? Well, when the market was “hot” people bought because the talk on the street was that it was a good time to buy. It wasn’t. But that didn’t matter. They bought because they bought into the hype.

The hype now is that the market is bad. Don’t buy the hype. YES, the market is bad-for SELLERS! Smart people buy low. Well, real estate is low. Ignore the hype. Buy while it is low and the money is cheap. We’ll never see another era like this. Jump on it.

Don’t say I didn’t tell you so. Separate from the herd.