For today, we’re going to ignore the “who could predict?” naiveté/arrogance of people like Countrywide’s chairman when discussing the market’s crash and burn, and explore the changing mindset of people who are so scared of this market that they won’t even stick one toe in the surf.
I teach a course on “How To Be a Seller In A Buyer’s Market” as well as one on “Buying In A Changing Market”. The courses have always been popular and well-attended, and a bargain at under $20 per person. Of the five scheduled for March and April, the enrollees are sparser than they’ve ever been (many continuing education courses are suffering the same fate) and one e-mail correspondent explained to me why she said she would go and then changed her mind. “I just think at this stage there is no possible way I can sell my house at any reasonable price so I am going to stay put until they carry me out.”
The mother of a potential buyer who wanted him to take my course also e-mailed me: “S. is out of the market for awhile. As his Dad and I were going to lend him the 10% downpayment, we think this is not a good time for him to be buying, as we might lose our money.”
The mindset that has changed participants into onlookers is not isolated to sellers or buyers with little money down. The “we’re just looking” buyers of a few months ago have signed leases with landlords and are settling down for six months or one year. Landlord acquaintances of mine report that they sometimes have competing offers for desirable apartments, and the “quality” of many of the tenants (their word, not mine) is higher than they’ve seen in a while. And more than a few of my clients who were gung-ho to sell are now perfectly content to rent at their monthly carrying charges (or even less if that’s all they can get). These homeowners then rent someplace cheaper and dig in to wait out the market.
Out of this area, the same rent, don’t buy (or can’t sell, rent) attitude seems to prevail, also. In Florida, the number of units rented in Miami-Dade and Broward counties between August, 2007 and January, 2008 rose over 40% from the same period the year before over the year before, while home sales dropped by basically the same percent. Coincidental?
Tomorrow, if nothing more urgent or annoying comes my way, maybe we’ll talk about renting a house from an individual vs. renting an apartment from a property company or other enterprise.