Crisis In The Housing Market
Economy Leaves Homebuyers Cautious To Commit
It turns out that the housing market works a lot like love. At least for some people.
Take Christina Huang. She fell in love with a $969,000 house in Northern Virginia. She could picture raising a family. But there were a few red flags after an inspection, and she realized it wasn't going to work.
It took her several months to go on a proper date with her husband. Her housing search has taken considerably longer.
Huang flirted with buying a house before the recession four years ago. She sat it out and dodged a bullet. Since then she has survived layoffs that cut half the staff from her division.
"The great recession has emotional damage," she says. "We are facing a world with great uncertainty. So are you going to feel comfortable to make a commitment?"
Home prices are back to where they were a decade ago and low interest rates mean borrowing is still relatively cheap, but buyers are still hesitant.
Huang is something of a housing market nerd. In her job, she conducts financial due diligence on companies before they merge. So when it comes to her personal decision to buy a house, she considers everything from high unemployment to the European debt crisis.
She worries where interest rates are headed and about a large inventory of foreclosed homes. She even frets over the political debate over the debt ceiling. All of which, she thinks, creates a little uncertainty around her own commitment to buying a house.
"The more volatile the economy becomes, the more fear we have," she says.
'A Bad Breakup'
Huang's hesitation speaks volumes about the market. Although there may be bargains, the continuing decline of home prices makes many buyers nervous. And uncertainty over jobs makes buyers less willing to make gambles on big investments.
Marshall Park is a real estate agent for Redfin, an online brokerage. He says with the past two weeks of bad economic news, buyers have pulled back.
"I think people are playing the field to fall in love. And I think in the back of their mind the whole time is the ex-girlfriend, which is probably the economy right now," he says.
For her part, Huang says she's still open to finding housing love. But her approach is very calculated.
"So it means that do your homework, have a parameter set up, so that you fall in love within that parameter," she says.
It turns out Huang likes this whole idea of falling in love within a set of safe boundaries. She did it with her husband.
They met at a friend's party. Then for months they talked on the phone, but only discussed business and politics. They finally shared personal stories. She discovered he helped his elderly neighbors. And only much later did she venture to say she liked him.
"So I guess maybe it is like the house," she says. "Like set up the parameters and then fall in love within those parameters."