We’re hearing more and more about Real Estate Markets once again beginning to appreciate. Yet, many buyers don’t seem to be in much of a hurry to make a decision. How can this behavior be explained?  Consider that there have always been two major concerns for most people purchasing real estate. The first is Price, with the question being: “Am I getting a good price?”  The Second concern has to do with selection: “Can I find a house that I want?”   During the past 4 or 5 years there has been no “Sense of Urgency” because of declining prices, coupled with an over-abundance of inventory.   In other words, buyers could get what they wanted at a discounted price.  With this situation being the norm for years now, buyers have come to expect both fantastic prices and great selection. This behavior by buyers has become a habit.

This is not so for 2012 and 2013. Inventory levels have begun to decline, prices are stabilizing, and in most cases, beginning to appreciate. Yet, the response by most buyers is the same because they have developed a habit of waiting. Just as many buyers prior to the boom years reacted too  slowly and were hurt when they jumped in too late by purchasing at peak prices, now hesitant buyers are still being hurt because they’re missing the opportunity to buy the perfect home  at  bottom of the market prices.  This reactionary behavior could cost buyers big money. Consider the following scenario:

Mr. and Mrs. Buyer are purchasing a home for $330,000. Rates are low and there are still plenty of homes to choose from, so they are taking their time with their purchase. And besides, interest rates are still extremely low and they’re concerned about the personal tax changes and the fiscal issues the U.S. now faces.  Their feeling is that it’s better to be cautious, especially when they’re losing nothing by waiting. This is not the case. No one has pointed out to Mr. and Mrs. Buyer that their delayed purchase is costing them thousands of dollars every month.   How?  It’s simple. The type of home the Buyers want to purchase in the neighborhood that is desirable was $300,000 last year. That’s a $30,000 increase in value during the past year alone.  If the property continues toappreciate at the same rate this year, it would increase $33,000.00 in 2013.  In other words, for every month that Mr. and Mrs. Buyer wait to purchase, they’re losing $2,750.000!  ($33,000.00 divided by 12 months= $2,750.00).

Every buyer should look at the appreciation during the past year and calculate what the impact will be if property continues to increase at the same rate as it did in 2012. Then they should ask themselves; “Am I willing to write a check for that amount every month for the satisfaction of delaying my purchase??” The answer should be “Absolutely not!”

Mr. and Mrs. Buyer may also want to consider that, with housing inventory levels declining it will be less likely they will get the best property as the most desirable property is usually the first to sell.