Well, the big Open House extravaganza was a moderate success on Sunday. We had seven of our listings in Scripps Ranch open and a huge ad running in an attempt to cross-market and generate some enthusiasm. We had a total of 53 visitors over the three-hour period – Not a bad day’s work. I sensed much interest but also much reluctance on the part of buyers to take the plunge. I know – This is starting to become an all too familiar mantra, but it is reality. Each of these listings, in our opinion, is priced properly; in several cases value abounds! The price-sensitive buyers out there, however, continue to take their time. From their perspective, the world is their oyster, and they for the most part continue to believe that prices will soften even more. Where prices will go from here is the $64 question, but buyers should not forget that any future retrenching in pricing which comes at the expense of higher interest rates may not leave them in a better position. Say you can get a 6.75% interest rate loan today. A 1/2% upward swing in mortgage rates will mean that you will have to see an approximate 5% price savings in that home you are eyeing up to realize the same monthly principal and interest payment. Put another way, today’s $700,000 home would have to cost $665,000 later if interest rates rise by 0.5%, but will it? Hopefully, buyers will begin to take this into account as they straddle the fence and wait for that “more favorable” market.
May 31, 2006