If interest rates are low, prices are dropping and inventory is high, why aren't more people buying homes?

True inventory is high but many of them are short sales and REO's. So the price hasn't necessarily dropped as they should. Banks still have a reserve price and flat out reject lower offers. Also, people can't qualify for loans, not like they qualified before this mess anyways. And mainly, people are scared and just waiting to see where it goes.If interest rates are low, prices are dropping and inventory is high, why aren't more people buying homes?
I second a couple of the notions already listed. The most intuitive way of understanding this is to put yourself in a buyer's shoes. Home prices continue to decline and though we are not in a declared recession, the economy is showing many negative signs. One of the biggest indicators is consumer confidence. Consumer confidence is just that, are you confident that if you were to buy that house: would the value of it continue to decline? If the company you are employed with is not faring the slow down so well, are you in risk of loosing your job? Will you have to take a pay cut? Will you be able to pay the mortgage? If you can't pay the mortgage will you loose your home (foreclosure)? If you face foreclosure will you ever be able to build your credit score back up? Bottom line is that ';you'; are worried/concerned for many reasons, so making one of the most important financial decisions of your life at a time like this doesn't seem so attractive anymore and you decide to hold off and see what happens with the economy. Here's another question... With all these people not buying and many loosing houses, what's going to happen to renters?If interest rates are low, prices are dropping and inventory is high, why aren't more people buying homes?
Yes, interest rates are low, inventory is high, but lenders are also being tight with their money. Lending to high risk buyers is how we got to the current state of affairs we are in today. It is a lot harder now to be approved for a loan than it was when the market was good. Lenders are pickier about who they will give money to - the standards are higher now because of all the trouble the subprime loans created.
First response is not correct; tax rates have decreased, not increased. (It is also irrelevant.) The main issue is that lenders are being much fussier about making sure that buyers are qualified; having gotten badly burned on a pile of junk paper in the past year or two, they are not anxious to stick their hands in the fire again.
People think it may go down more and they will get a better deal. Also the downpayment, lots of people do not have money to put as downpayment. Bad credit - lots of people have bad credits. Employment - many people are laid off and can't find jobs right away, so they don't know if it's a good idea to jump into this type of investment.
I JUST BOUGHT A HOME!!!! YIPPEE! I CLOSE NEXT WED.





You will never believe this in a million years, this home is owned by a couple in their late 50's. They are the only owners of the home. It sits on an acre of land with a shed w/windows that he paid 5k for not long ago, they had a landscaping company take care of the lawn (awesome landscaping) they had a pool put in 9 yrs ago plus a sunroom. The house is full red brick. They had the pool gated with a black iron fence (very nice) the had all mexican tiled floors put in throughout the home. Central Vac even....I check to City Tax website and he built the home in 76 for 40k. He had the home listed at 210k then dropped it from last October to 189,900k. I went in and offered 175k with the condition that up to 8.5% of the price he must pay closing and down pymt assistance. He countered at 185k. I re-countered 180k. He accepted and I close next Wednesday. (this all transpired 3 weeks ago)





So, basically...I put down 500 bucks as a binder which i get back next week at the closing table.





I'd say, I got the deal of the century. It appraised at 203k and when it's all said and done I'm financing 174,600.
The housing market is in a decline right now due to the mortgage crunch and people losing jobs...plus the rising fuel costs affecting food and utilities. Many people are afraid to take the plunge as so many did and are now in foreclosure
Because Bush raised taxes on the the middle class and gas is high to get to work and they can't save money for a downpayment. True
The best quickest answer: Most people believe prices have NOT bottomed out yet.