Anxious Would-Be Home Buyers Sit This One Out
Thursday, September 25, 2008
D.C. real estate agent David Crossland can tick off a list of clients who have gotten cold feet as the turmoil in the financial markets has worsened.
There's the District lawyer who decided to sit it out because "he's strapping in for a recession," Crossland said.
There's the young couple who were itching to buy on Capitol Hill but decided against it. "They're convinced times will get worse."
He said, "It's kind of a bummer."
No kidding. Yesterday the National Association of Realtors released a new round of glum numbers about home sales. The Mortgage Bankers Association said home loan applications have dropped. And interest rates have moved back over the symbolic 6 percent level.
Even the head of the usually gung-ho Realtors group raised doubts that the Bush administration's proposed Wall Street bailout would enable major financial institutions to lend more freely and thus help the battered housing market.
"There is a serious question as to whether a cash infusion by the U.S. Treasury into Wall Street would help consumers by improving mortgage funding," said Richard F. Gaylord, the group's president.
Patricia Cook, a stay-at-home mother who was hoping to buy her first place in a few months, has her doubts, too.
"We're going to delay because there's too much uncertainty," said Cook, who is watching the drama unfold on Capitol Hill. "I'm watching the hearings. I'm watching the stock market. These are things I never used to do. . . . I'm anxious."
The country's economic troubles are rooted in a housing crisis that started more than a year ago when subprime borrowers with poor credit or little cash started defaulting on their mortgages at an alarming pace. Since then, the number of foreclosures has mounted, and home sales and prices have plummeted.
Yesterday, the National Association of Realtors reported that the median sale price on existing homes tumbled to $203,100 in August, down 9.5 percent from a year earlier. The median is the point at which half of buyers paid more and half paid less. That's the biggest drop since the group started tracking the numbers. The volume of sales fell 2.2 percent from the previous month, to a seasonally adjusted annual rate of 4.91 million units.
With prices down, Cook thought it might be a good time for her growing family -- she and her husband have two boys and another on the way -- to buy a place larger than their two-bedroom Fauquier County rental. Now she's thinking 2010 might be better. Several local real estate agents said she's not alone.