I have been contemplating the changes in the market recently. It is interesting from a scientific point of view but maybe a little scary to the average person, especially those hoping to buy or sell a home in the near future.
I have been pondering and feeling fascinated at how sudden the market has changed. In Utah County, up until Christmas 2006, maybe just before, it seemed we, as agents, had buyers coming out of the woodwork but no one wanted to sell their home. If we were fortunate to find a willing seller, we could count on adding about 12 – 15 percent onto the daily current market value and get several full price offers within a few days. Appraisers, it seemed just could not keep up. Homes going under contract at the current “in-demand” price would, show up as sold comparables, too low for the increase in what buyers were scrambling to pay just six weeks later.
This year has seen such a dramatic turn around. Now, instead of desperate buyers looking for almost anything for sale, there are sellers listing their homes in record numbers, but buyers are scarce. Why the sudden change?
I noticed something interesting last night watching TV. There were two back to back commercials for two different car manufacturers. One was offering 60 months, interest free financing. I was amazed at the offer. The next commercial was offering 72 months, interest free. So, not only are consumers not buying homes right now, I come to the conclusion that they are not buying cars either. What causes such sudden shifts in the market? There have been obvious causes in history such as 9-11, but have I missed the most recent cause? There has been nothing so obvious that I can put my finger on. One theory I have is that the sudden high rates of foreclosures nationwide are making a bigger impact than any of us realize. The whole “sub-prime” thing may be taking it’s toll on even those not involved.
I am curious about your opinion on this matter. Please comment with your thoughts or theories.