It was once said that there are two main emotions that drive any market – fear and greed. As a general rule, the side with the royal flush tends to play the “greed card” while the side with an lowly pair deuces operates from the “fear” side of the equation. This market is definite staked towards buyers and as a result – some are overestimating their power by pushing the greed card way too far. I never knew there were so many ways to blow the opportunities that this market has to offer by simply being too greedy.
Westchester Home Buyers who assume they can just lean hard on sellers until they cave…
Buyers seem to be playing a lot of games lately and some are almost drunk with hubris. Nevertheless, parts of the housing market in lower Westchester is no longer a no-holds- barred buyers market. Some of the most desirable pockets are transitioning to a sellers market. Transitioning markets are tricky – the transition might be real – or it might be just another false start. But its a trend that has been ongoing for a while now – so I do take it seriously.
For the moment however, buyers are coming up with some very creative ways of shooting themselves in the foot.
Many are in for a surprise….
Slowly, inexorably, many are finding out: you can just push a seller so far before they blow – and when you do they may not agree to work with you further. I’ve had situations where listing agents have just said they are “through” with my buyer – please do not come back with any further “offers”. Personally, I have done the same when on the listing side. Low-ball after low-ball tells me the buyer is going to be a problem right up to the closing table. So as a listing agent – I want no part of that for my seller’s sake. It indicates that they may keep trying to “renegotiate” the terms and find fault through every step of the process to just get one more dig in. It also indicates a lack of commitment to the property. Sometimes its the sellers themselves that pull the plug when a buyer keeps coming back with really ridiculous offers.
Over the past few months I have had buyers turn up their noses at some unbelievably nice deals. Some have done so through repeated low-balls – others have just refused to accept the market as it stands and make no offer at all because they think conditions are going just keep getting better if they continue to wait. The trouble is – I just don’t know how much more “affordable” this gets. Its better than its been in decades and not likely to improve much in that regard.
You can’t fight the market.
I wrote a post on fighting the market fairly recently. I advocate for my buyers to get them the best possible deal. But it seems that I spend most of my time trying to coax my buyers to bring them into the land of reality. After all, I can’t advocate for something that is totally unsupportable by such trifles as the facts. So Its not as if these buyers haven’t been advised that their actions are counterproductive. The problem is that they think they can get away with just about anything. So they keep pushing the envelope and eventually wear out their welcome. Its amazing how supposedly sane adults – can manage to shoot themselves in the foot repeatedly while missing out on the best markets for affordability that we have seen in decades.
Most buyers don’t get that these ARE already bargains.
When I was just out of school – in the late 1980s and early 1990s – I was thinking in terms of purchasing a studio. Today I’m seeing young people fresh out of school insisting that they need a 2 BR condo with a granite kitchen and tumbled marble baths within 0.5 miles of a train station in a building loaded with amenities.
In my parents day – it took time to afford a house. My parents chose apartment life until I was almost six. As a family we lived in about 1100 sf of space with 1.5 baths. My parents had been married about 8 years before they bought a single family home. When they bought – they got a great location. But there were no deep walk-in closets, no marble baths – not even a master bath. The kitchen was almost absurdly small by today’s standards. My father was a partner at a major law firm and my mother had – among other things – was a radio interviewer – so they were affluent. But they both realized what buyers today need to recognize – you are buying the location and that will limit the amenities.
I’m seeing young people just out of the starting gate – mostly without children yet wanting master bathroom suites in marble, central air, great rooms and huge kitchens and don’t forget the California closets. All of this needs to be near the town and train and in a banner school district. They are stunned when all of this is out of reach. What baffles me is why they are so shocked. It took their parents YEARS to get to that house they want to duplicate.
The Westchester NY has always been expensive!
Right now the fact that the home of your dreams is out of reach has nothing to do with the housing bubble and nothing to do with where prices will settle. The housing downturn has not reversed the trend that real estate is location driven. This is still Westchester NY – we are 20 miles and 30 minutes north of Manhattan and metro-north makes the commute easy-peasy. Its going to be expensive to live here and that is something that will never change.
Real estate is supply and demand. Westchester’s supply is limited in good part by wetlands. That is one of the main reasons why Westchester didn’t get too caught up in the building spree that went on during the bubble. The lower part of the county was very much built up. So we didn’t end up with the massive excess capacity in housing that happened in places like Florida.
The first home for most is the “starter home”. It won’t have everything you could dream of. But you can make a life in it and what you do with it will make it home. That’s the way it has always been. It was never cheap to live here – and it never will be…So my advice is to stop thinking about what you can’t have and focus on what you CAN have.
No urgency? Think again…
No one knows when the housing recession will officially end – we will only see that through the rear-view mirror. However – since the middle of 2009 – after the market fell off a cliff – buying has been a safe bet. We had a sharp downturn in most areas and then a gentle slide lower – but nothing that won’t come back later. I do not have a crystal ball – but here are two reasons why buyers should be ready to pull the trigger.
1. Renting is getting rapidly more expensive the rise is alarming and the supply is razor tight – so this trend will accelerate over the next years.
When rents go up significantly – it destabilizes the cost of living for renters – and pushes people who are capable of buying into the market. This can push prices higher at the entry level.
2. Some of the most popular areas in the higher end market are starting to edge up in price which is a bellwether for the rest of the market.
I saw this trend starting at the end of 2009 and it continued after the tax credit ended. In some areas of lower Westchester you can not buy as much house as you could in 2009 and 2010. If this continues – and it is expected to – this will filter into the other municipalities – turning a bear into a bull.
These are signs that the buyers hand is starting to get weaker. I can’t predict the future and there are plenty of ways in which the recovery can derail. It is impossible to call a bottom to any market. One thing is certain – this market won’t last forever – its already been too good for a bit too long. The question is whether buyers will bite the bullet and make a win-win deal or whether they will continue to shoot themselves in the foot until their advantage is gone.
© 2011 – Ruthmarie G. Hicks – https://thewestchesterview.com – All rights reserved.
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