While the U.S. housing rebound continues to march onward and upward, and there is no serious lack of homes to be bought and sold, homeownership in America remains low. Many otherwise qualified buyers continue to sit on the sidelines instead of participating in what could be a great opportunity. So why aren’t these individuals making the move?
It’s not that the potential home buyers don’t want to purchase or fail to see the value in homeownership, but rather something that is very well within their control. So what’s really holding them back?
1. Fear of not qualifying for home loans
Such a big deal has been made about how tough it has been for even those with good credit to qualify for home mortgages that many have simply been scared off. This is further evidenced by the fact mortgage giants Well Fargo and JP Morgan Chase have recently reported volume down by as much as 70%. While lending may still be working on loosening up again, it is reportedly becoming easier to obtain credit. There are also increasing options for alternative types of credit.
2. Unaware of how affordable homes are today
Even though a lot of noise was made about how cheap homes became after the crash, many may still be unaware of how affordable homes are. This is especially true when comparing where home prices are expected to go in the next few years. However, even more significant is how inexpensive mortgage payments can be today. Many could find they are paying far less to own than rent, and far less than they expect.
3. Afraid of scams
Real estate and mortgage scams haven’t vanished. Some reports show they have actually increased with new opportunities arising from vacant and abandoned homes. Consumers don’t feel that they can trust big banks, Craigslist ads and other sources of information. Now, instead of assuming the best, consumers often automatically assume the worst and are being far more critical of ads and first contacts. They are putting a lot more effort into upfront due diligence than before.
4. Not sure where they’ll be long term
An increasingly mobile world and rapidly changing business markets means more migration and more uncertainty about where the best jobs will be as the dust settles in the next few years. This could certainly be holding some back from pulling the trigger on housing. What they need to know is that buying a home now may be their best, if not only, shot at building up enough down payment for their dream homes when they do decide to settle down. Homes purchased now can also always become rental properties or vacation homes later on, or simply cashed out to stash money away for retirement.
5. No one responds
Customer service is still deplorable in the real estate industry as a whole. Despite the rise of all types of tech solutions for maintaining and automating databases, follow up, outsourcing call center needs and more, many sellers and their real estate agents have been so poor at follow up that many would-be, qualified buyers have just given up trying. Meanwhile, homes sit on the market – actually losing value due to being perceived as being unwanted by others. Those real estate industry professionals that manage to bridge this gap will easily be those with be best short term revenues and largest long term profit margins.
6. Too many choices in service providers
From a consumer stand point, too much noise can be worse than a noise vacuum. If everyone appears the same, no one stands out – causing paralysis. Others could be more approachable. The solution? Ask for the business.