Monday, April 14, 2008

Prices Falling, Not The Sky

A headline at MSNBC's website today reads Poll: Growing majority avoid buying homes with a scare sub-header of "Americans' pessimism over housing crisis seen growing." The story goes to detail the drastic impact the housing "crisis" is having on ordinary Americans:

"This is a great time to buy, but not necessarily to sell," said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can't because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.

"We're just going to have to slap a Band-Aid on it and stay here until the market gets a little bit better," Jackson, 30, said in a follow-up interview.


Yes, it's sounding more and more like the Great Depression all over again.

In the fifth 'graph, we learn exactly what "growing majority" really means:

Sixty percent said they definitely won't buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.

Maybe it's just my natural optimism, but is this really such devastating news? After all the wheeling, dealing, and moving about that transpired in the last ten years is it really that surprising that fewer Americans are considering a move now that housing prices are falling? Isn't that a natural and prudent reaction to market conditions? I'm actually surprised that 40% aren't ruling out buying a house in what is really a pretty short time horizon.

Housing prices rise and fall. At times the market favors the buyer, at others the seller. Since many moves involve both selling and buying a home, the net impact isn't that much different if the market is weak or strong. You either get more and pay more or visa versa.

Having had recent experience with both ends of the equation, I am encouraged by the fact that most of the poll respondents appreciate the opportunity current market conditions provide:

Fifty-nine percent think now is a good time to buy.

A very good time indeed.

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