Where are the buyers?
A recent study showed the Top Three issues preventing buyers from completing purchases, and the top issue was one that hasn’t been around for the past few years.
According to the survey, the #1 reason keeping buyers from purchasing real estate for 2012 is “Economic Insecurity”. While difficulties obtaining financing were cited as the leading challenge among buyers in 2010 (61 percent) and 2011 (65 percent), in 2012, the percentage noting this challenge dipped to 49 percent. Problems selling their current homes, similarly, declined in 2012 to 43 percent, down from 59 percent in 2011 and 57 percent in 2010.
Economic insecurity was not in the top three in 2011, nor 2010. I was telling this to a seller of mine just yesterday. Recent buyer activity has dropped drastically in Central Arkansas. Since January 2012, the current inventory in Central Arkansas has risen from 1.7 months to 5.98 months of inventory! That is a 250% increase in just 6 months.
There is a good amount of inventory now and some at great prices. We all know that interest rates are at an all time low, again. So what is the problem with the slow down in buyer activity? We had experienced increases in the number of closed transactions til May 2012, but saw a drop in June, and I would expect another drop for July as activity has been slow so far this month.
It is actually getting easier to obtain financing, and most buyers know that pricing probably won’t continue to go down since 2010 & 2011 were the worst real estate years for our state in 15 years, and Arkansas prices actually increased by around 1% (not much, but better than the other alternative).
I did some recent research on my own to see what is going on. Here is what I found out.
The number of buyers to active listings in January 2012 was 1 buyer for every 2 listings. We experienced a huge January 2012. For June 2012, it is 1 buyer per every 6.25 active listings. Wow! The listings are out there, but the buyers have shut it down! I couldn’t understand why, but my guess was the economy and current policy. Didn’t have any proof, until this survey was released today.