According to this Housing Wire article, 75% of people recently polled by Fannie Mae felt pessimistic about the real estate market, and that it’s not a good time to buy a house. So, if you’re among the many who feel that way, and you’re thinking about holding off for prices to come down, you’re not alone.
Considering that interest rates are up and prices haven’t dropped as much as buyers would like, it isn’t surprising to hear that news. In Mammoth Lakes and many cities nationwide, some marginally qualified potential homebuyers have legitimately been priced out of the market. But many others are simply being cautious, not wanting to make a mistake by buying in this market, especially when so many other buyers don’t seem to think it’s a good time to buy.
But that still leaves 25% of people who don’t think it’s a bad time to buy real estate. Who are they, and why do they feel that way?
Well, wealthy people may not comprise that entire 25%, but they’re at least among the people who feel like it’s a fine time to buy real estate. Yahoo finance just reported that billionaires have a growing appetite for buying houses, even as the market slows down.
That probably sounds like an apples to oranges comparison. After all, the wealthy have, well…wealth. They can afford to buy real estate, regardless of whether the market is up, down, “hot” or not. It often seems like the rich get richer, and the poor get poorer, even when times are tough. (Perhaps even more so during those times…)
People have every right to look at it that way, but it probably won’t make them any wealthier. The more productive thing to do would be to look at what the wealthy are doing during times like this that the majority of people aren’t doing… and consider following their lead.
According to the Yahoo article, buying real estate is particularly appealing to them because:
- It’s a liability that tends to appreciate over time
- It provides significant tax benefits
- It can be used as collateral
- It can be passed to heirs with little or no penalty
Generally speaking, wealthy people take on debt and liabilities that make (or save) them money.
While they can certainly make bigger purchases with less concern than the average person, they aren’t in the habit of making decisions that will lose them money, if they can help it. So if they’re buying real estate in the current market, it’s a pretty good sign they’re not worried about losing money on a house in the long run. Real estate is (and always has been) meant as an asset that provides many long-term benefits.
So if you’ve been thinking about buying a house, but have concerns about whether you’ll be paying too much or lose money, take all of that into consideration. House values may seem “high” right now, but over time they’re likely to be even higher. And since the majority of people seem to be pessimistic and hesitant to buy right now, you might be able to find yourself a better deal than you otherwise could.
Nearly 75% of people feel like now is not a good time to buy a house, but the wealthy are still buying real estate.
While it’s easy to say that the wealthy don’t care about whether the market is “bad” since they have more assets and capital to work with, they’re also not likely to make such relatively large purchases if they feel they’re going to lose money.
So if you’ve been hesitant to buy because you’re worried about paying too much or losing money, take that into consideration and know that buying a house is a solid long-term investment. Capitalize on the fact that the majority of people are pessimistic, and buy a house while there’s less competition and a better chance of negotiating the price down.