The Home Market Isn’t Back Yet

A  slew of recent articles have been focusing on the financial make-up of home-buyers in the last quarter. Over 40% of home sales were to cash buyers. That is a whoppingly huge number, by any measurement, and it points to a few things that make this housing recovery feel so different.  And, what truly makes that number so freakish is it isn’t representing a lot of institutional buying- which has been going on for the last year (Wall Street Banks and hedge funds have been swooping up foreclosures from coast to coast by the thousands using Other People’s Money)-but has lately been tapering off as the deals have been getting more scarce. No, this represents something different, and is due to a few factors which might represent a structural change in the home-ownership equation in the US. First, I think that a lot of people were burned by their banks when those supposedly friendly banks called and cancelled home equity lines in 2008 and 2009. What were supposedly rock-solid loans and relationships were cast aside and cut apart- severing any type of positive feel people had for their banks and bankers. And, now in the aftermath, the lending requirements, paperwork, and regulations are so burdensome, many of us would choose to just leave banks out of our business all together.

Secondly, I think that there is a systemic fear of the future, which translates into a reluctance to borrow money stretching out into that future. Those of us fortunate enough to have owned a home have some basic grasps of economics- and a country that owes over $17Trillion sounds like a risky place to be. The stock market being at an all time high should be making people feel more secure-instead, it seems to make us all look at the horizon, waiting for another shoe to drop. Still, with super-low interest rates, amazing home-owning opportunities are still out there. A decade from now, I have a feeling we’ll be looking back and, for those that took advantage of these low interest rates, we’ll be thankful that we were courageous when others were fearful- just like Warren Buffet advises. And, for the lucky few that we build for, they’ll be enjoying their homes that we built for them well into that future.

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