Where will the Wheel Stop?

>>The season is here. Or is it? The roads and restaurants may be crowded, but will our winter guests be in a homebuying mood? Will they give our residential market the jump-start that is so desperately needed?

Sellers are optimistic that they will. They make a strong case by stating factors that support their position, including attractive interest rates, positive economic news and a smorgasbord of choices for the buyer. Let's examine each of these factors a little further.

Attractive interest rates. Long-term interest rates are near a 12-month low and by historical standards are still very attractive. Other economic indicators such as unemployment and consumer confidence suggest a bullish economy. But we had these conditions last year. In fact, most of the leading economic indicators have been at record levels for the last several years, yet we find ourselves in a falling residential market. Therefore, this won't be the battery that starts our market.

Buyer's smorgasbord. In my 25 years of selling homes, I have never seen such a supply of homes and condominiums for sale. Imagine that our residential market is a bathtub and the water in it represents the homes for sale. If we opened the drain and didn't put another drop of water in, it would take almost two years to empty. In reality, there is still more water coming in than going out, which suggests an improving buyers' market.

This should be the signal for the buyers to start their engines. Unfortunately, I believe too many buyers will miss this great opportunity because they will wait one day too long. Or put another way: They will spin the wheel one too many times. Think of it as playing Wheel of Fortune. The contestant can solve the puzzle but wants to keep spinning in order to accumulate more money. This makes sense; however, there is risk with each spin because the wheel can stop at "Bankrupt." Some will quit spinning as soon as they know the answer; others get greedy and end up with nothing.