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Bargain hunters abound during slow market
The slowing housing market affects all aspects of our economy. First of all, there is a surplus of homes on the market, causing the slowdown to change the atmosphere to a buyer’s market.
Although there is a surplus of homes on the market, which usually causes prices to decrease, we have not seen much of this lately. It seems as though sellers are not budging on their asking prices, and are willing to keep their home on the market for an indefinite period of time, if it means not lowering the price.
Although there have not been any significant drops in prices, the real estate “vultures” are still out in full effect hunting for their next property bargain.
These people come out when the market starts to slow and look for properties that have huge price decreases because they are not selling for the normal asking price.
An August 7, 2006 article by Les Christie of CNNMoney.com, “Slim pickings for real estate vultures,” discusses the fact that although there is a slowdown, bargain hunters are not finding many deals right now.
“As signs mount of a slowing real estate market, the ‘vultures’ are beginning to circle. But home prices may still have to fall further to create the bargains they crave. These savvy home buyers who ‘save their pennies, wait for bargains and then pounce’ are already out and about in Manhattan, according to Leonard Steinberg, an executive vice president with Prudential Douglas Elliman. There are so many circling Manhattan this summer that they may be canceling each other out. Any little price weakness attracts them and the competition they provide keeps prices from decreasing.”
There seems to be a drop in the sales volume, but not really a drop in the prices. Most areas across the nation have experienced a decrease in the amount of sales, but not really a decrease in the prices.
“Pam Liebman, CEO of the Corcoran Group, a brokerage that specializes in Manhattan, Eastern Long Island and Florida properties, says she has seen no price fall off to date in Florida. ‘Buyers may be negotiating more, but sellers are mostly holding firm, she says. ‘There's been a drop in sales volume but not in prices.’”
“Jonas Lee, a co-founder of Redbrick Partners, makes his living by buying residential properties at the right price. Lee hasn't noticed any wholesale bargain hunting yet, though he says the general slowdown in markets nationally should create buying opportunities for vultures.”
The only problem is that the so-called vultures themselves could be causing the prices to be stagnant because of increased competition.
“As for vulture investing, Gillespie doesn't think that the once bubbly markets on both coasts offer much; prices are still just too high and rents, although strong, don't throw off enough cash to produce cash flow. Investors buying in most of these areas would have to rely on big price rises, something that may not be in the cards for a while.”
The vultures will just have to continue circling their housing prey, while they wait for the prices to drop further – if and when they ever do.