Friday, January 21, 2011

Top Homebuying, Selling Predictions for 2011

Excerpt from Top Homebuying, Selling Predictions for 2011
By Tara-Nicholle Nelson, Inman News

During this first holiday season on the road leading out of the recession, American consumers are taking different approaches in their decision-making.

Retailers capitalized on the dichotomy, with one luxury automaker promoting a "Season of Reason" sales event in which buyers were invited to "oversave" for gifts and personal purchases by spending $50,000 or more on a new car (irony, anyone?).

Such split mentalities, so to speak, will be a psychobehavioral theme among certain sectors of real estate consumers in 2011, says my crystal ball. The mindset of homeowners, in particular, will largely go in one of two directions.

Homeowners facing significant negative equity (owing much more on their homes than they are worth) will be increasingly willing to walk away from their homes, cutting their losses and strategically defaulting on their mortgages.

Homeowners who bought at the tail end of the boom will decide to stay put and bloom where they are planted, having lost faith in a "hockey stick" recovery. Similarly, sellers will fall into several distinct mindset camps in 2011.

In the markets that have come out of the recession fairly well and are projected to do well in 2011, some sellers will thaw their self-imposed freezes and list their homes. But they will do so with a greater receptiveness to the market than they have had during the past several years. When their homes lag for 30 days, they'll start cutting prices with less reluctance than before.

Buyers will tend to fall into two major mindset categories. The first category will be the non-urgent buyer in a recession-resistant market who missed the tax credit (yep, they've been looking that long). The non-urgent buyer is only willing to commit to the right property, even if that means they must see 100 homes and make 20 offers to do that.

The other group of buyers will be similar to "transactionally sophisticated" sellers -- very strategic, resourceful and adept with information. These buyers are very aware that their decision to buy a home will need to be a long-term one. They are willing and able to relocate, and they are researching everything from job growth to migration statistics before selecting the town where they will purchase their home.

2011 will truly be a season -- or rather four Seasons of Reason, when it comes to the way buyers, sellers and homeowners approach their real estate decisions, although reason will manifest itself in different ways for different niches within these consumer groups.

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