The following excerpt is from an article written by Lawrence Yun, National Association of Realtors Chief Economist in the Realty Times on July 3, 2008:

Soft Data from REALTOR®® Members

There are a measurable number of potential buyers who have the financial capacity and mortgage qualifications, yet are refusing to jump into the market because of price decline fears. These hesitant buyers far outnumber the people who are unable to secure a mortgage.

The implication is that once there are signs of market stabilization then we may see a rush of buyers returning to the market. The recovery could be robust rather than tame. It also implies that the homebuyer tax-credit being discussed in Congress right now as part of the housing stimulus bill could make a big impact in drawing buyers to the closing tables.

Separately, I have received a lot of feedback from Realtors®® across the country about some unique factors that are not yet being captured in hard, quantifiable statistical data. The common themes are:

(1) Short sales are excruciatingly frustrating because lenders take forever to reply

(2) REO (bank-owned) properties are getting multiple bids and selling above list price

(3) Homes sell without a problem if priced correctly

(4) Many eager buyers cannot buy because they cannot sell their existing home

(5) Buyers of fixer-uppers are not buying because of the high cost of construction

(6) Builders are selling for less than the cost of construction and hurting the existing home market

(7) Low appraisals are leading to fallouts

(8) High gas prices are impacting neighborhoods far out from the city

(9) The media is painting inaccurate picture not related to my local market conditions and scaring away the buyers

(10) Buyers are waiting for the prices to drop further before committing

Most of these factors, as I see it, point to sizable pent-up demand waiting to be released into the marketplace. Particularly intriguing is the prevalence of multiple bids - after prices drop. Once it begins to take place, many buyers will be buying on the way up rather than on the way down. As is always the case, the market bottom will have been realized only after the fact.

Copyright National Association of REALTORS®®, Reprinted with permission. 

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