The Myth of the "Bad Market"

Why aren’t more people buying homes today?

That’s one of the big questions in real estate these days. In many regional markets—even in markets that haven’t seen prices depreciate or foreclosures increase over the past couple of years—potential buyers have been hesitant to jump into the market right now and prefer to play the waiting game instead. Other potential buyers have seemed to give up on the idea of buying a home altogether, as evidenced by the high rates of rental occupancies. Although the general economic conditions across the country have undoubtedly contributed to the lack of buyers, that’s only a small part of it.

One important clue to where all of the buyers are has to do with the perception that the housing market is in the tank. In truth, it’s not. Rather, the reality is this: Market conditions favor buyers right now and homeownership is certainly within reach for many people who want it. In other words, it’s a buyer’s market, not a bad market. The idea that the entire national housing market—from top to bottom—is struggling is a myth.

Where did this “bad market” myth come from? Much of it comes from the media. Over the last couple of years, the media has been focusing mainly on the negative aspects of the real estate market: falling prices, a slowdown in building and—more than anything else—the rise in foreclosures, especially in markets such as Las Vegas, Phoenix and Miami. But how much have we heard about regional markets that continue to be stable? Or homes that continue to increase in value in many areas? Or how average mortgage costs are actually below rental prices in some areas? Unfortunately, bad news seems to generate more ad revenue and sell more newspapers, so it’s not surprising the positives in the national housing market are often under-reported.

Of course, it’s true that all real estate is local and market conditions vary from state to state, region to region and even from neighborhood to neighborhood. However, one aspect of the current market that definitely favors buyers across all markets is the near-record interest rates. This is a major reason why it’s a buyer’s market. Although interest rates are slightly different in different areas of the country—and, obviously, are different from lender to lender—a buyer with good credit can definitely secure a mortgage with a much lower rate than we’ve seen in recent years.

If you want the very best information on the market conditions in your specific area or neighborhood, talking to your real estate agent is a must. Their knowledge of current market conditions and their ability to gauge future market trends can help dispel any myths. ∆