I was reading an article in a past Kiplinger magazine and it made a good point (though the article was trying to be mostly up beat), a lot of sellers are stuck. They have drawn most or all of the equity out of their home. They can’t afford to lower their price.
My thinking is, this may or may not have been REAL equity, none the less, they withdrew it. So, they don’t have much, if any, wiggle room to lower their price without taking a big hit. I could see new home prices dropping and existing homes just not selling much, due to the fact existing owners can’t reduce their price enough to lure in a first time homebuyer. I think the key player in all of this is the first time buyer. They are the ones that must be lured in to buy, so, in the case of an existing owner, they can move up. Other than location, why would a first time buyer purchase an existing home if they could buy a new home cheapr? I’d think they would pass on the existing home.
Listening to Wall Street Journal Today on XM this morning, they were saying that it was half the price to rent in Washington DC, than to buy, so they recommended potential buyers just wait.
