Blame the Home Builders For This Rotten Housing Market

“This [housing] market sucks,” stated Jamie Reynolds of Orlando, Florida.

Jamie and her husband want to buy their dream home. They can afford a home; they have steady employment; they have great credit…they are a “vanilla” file for any mortgage broker.

So What’s The Problem?

The problem is that the Reynolds keep reading the papers and watching the news. The result is that they’re not buying.

Why? What possibly could the Reynolds be reading, seeing & hearing to keep them from buying their new dream home?

How Many Reasons To Buy Now?

**Interest rates are historically low…a person with good credit can get ~6% on a 30 year fixed rate loan.

**People, not just Boomers, especially want Florida’s mild winter weather. People are still moving to Florida, and the “experts” predict more and more people to continue moving to Florida.

**Rental rates are going up in many parts of the country, despite the number of empty houses owned by investors-speculators.

Who’s To Blame?

Is the media to blame for the “comatose” housing market afflicting many parts of the country?

Simple answer. No! But really, who cares? If you’re in the market for a new home, stop thinking too much. You have a great opportunity to negotiate a big discount and grab a ridiculously low interest rate.

Let’s be clear, the media is not to blame for the slumping housing market, despite the horror stories appearing in the Sunday newspapers.

“Every Sunday, we grab the paper and read the Real Estate section,” said Jamie. “Every Sunday,” she adds, “almost every home builder has a big ad with “before” pricing and the new discounted price. In every Sunday paper, it seems the builders are slashing prices by $10,000-$30,000 per week. I mean, I swear they’re cutting the prices this much…every week.”

The media, both print and broadcast, sell advertising and papers.

Who’s To Blame?

Should you feel obligated to blame any one group for this protracted housing market slowdown, blame the Home Builders.

That’s right, blame the builders…their ongoing tactics are keeping the Reynolds and perhaps countless others from purchasing a home.

In an up market, the builders go for profit. In a down market, the builders go for market share. Therefore, the builders will dump “units” as the builders call them to gain share.

As Jamie iterated, one week the builders’ ads in the newspapers show a $349,000 sales price, which just happens to be a blistering $25,000 price cut from the previous week’s sales price.

Stop The Madness!

“Who knows, I might open the paper next week and see another $10,000 knocked off the already discounted price,” added Jamie.

The home builders apparently cannot understand how this negative sales strategy affects many potential buyers. Despite some valid reasons, why would a buyer who doesn’t have to buy today actually buy a new home amidst this price cutting?

The price could, or probably will, be lower tomorrow, if the homebuilders continue their irrational sales tactics.

As unpredictable as the homebuilders’ pricing tactics, the media is not responsible for this slumping housing market.

Beyond Slumping Sales Is Tragic Foreclosures….

In fact, the media also is not enabling this weak housing market by reporting increased foreclosures, especially when real people are financially ruined. These are real tragedies afflicting real people and, despite the tragic circumstances, the media wants to put a face behind the tragedy.

Of course, the collateral damage or fallout negatively influences people like Jamie and her husband, who hear about risky adjustable rate or “designer” mortgages and foreclosures and heavy price cuts.

Jamie said, “The Realtors and mortgage people want us to buy. They make really good points about the low interest rates and the inventory. At this time, we’re really confused and we don’t know who to trust. We hear these stories of people getting these interest only and adjustable rate loans and they are now in trouble. Does that mean that all interest only and adjustable rate loans are bad? We’re really confused and can’t afford to screw up.”

Are the home builders listening? This is exactly what’s suppressing the country’s housing market. People who do not need to buy a home are mostly sitting on the sidelines, waiting for the builders to capitulate.

Once prices stabilize and people stop seeing $10,000, $20,000, or $100,000 slashed off last week’s new home prices advertised in the Sunday newspapers across the country, the market may stabilize.

The market will stabilize when prices stabilize. Prices will stabilize when the home builders change their pricing tactics. The builders’ pricing tactics must change to get buyers off the fence.

Blame the Home Builders For This Rotten Housing Market