Analysis Paralysis

Last week Kathy and I were on our way home from a quick trip to Montana and stopped to look at a pre-owned Honda Civic for our college aged daughter located at the Honda dealer in Auburn. It’s always fun visiting a car dealership without an appointment. As we exited our car in the dealer’s lot we were descended upon like bees finding an unattended jelly sandwich at a summer picnic. “Uh-oh Kathy, here come the sales people”

Kathy was ready for the sales hoard. She stepped forward and took the lead as we were double teamed while viewing the prospective Civic. Kathy asked questions, lots of questions. Before long – wham! One of the sales people went down and scurried back to the dealership to find the answer to a question he could not answer. The remaining salesperson battled gallantly. Although Kathy tried not to let on he knew instinctively that we were not going to buy a car that day. When Kathy’s questions descended into the “what’s the bottom line price on this car territory?” the salesperson was thoughtful. Finally he replied “some people get analysis paralysis when shopping for a car”

My first thought was to laugh out loud but I held my stony facial expression not wanting to anger my bride. Although the salesperson had won the battle with that statement he had lost war. We exited the dealership quickly after that.

As we drove away I could not help applying the salesperson’s analysis paralysis observation to the real estate world and my own experiences over the past six months.

Never have I seen so many ripe buying opportunities. The market is at the bottom of the cycle with interest rates at an all time low – hovering around 5%. Sellers, like our car salespeople, are in the corner beaten and bloody. Home values in the south sound are down 10% to 20% depending on the price range. Land values have plunged even more, down 30% to 40% in most cases. 5 acre tracts that were selling for 175k pre-crash sell for 85k at present. These numbers are well documented. I’ll spare you statistical page for the moment.

Yet as I write this – buyers for the most part are on the sidelines. Sales are steady but definitely not at levels that we could label as good. Land sales are downright slow. All this in what in my humble opinion is the best buyer’s market since 1985.

Web site hit statistics on Keithfuller.com and Windermere.com are at an all time high. Buyers are watching and investigating listings. Buyers are eagerly analyzing available statistics such as price per square foot (a statistic that works well in subdivisions with identical homes and lots but is useless otherwise), sales price vs. asking price percentages and county assessor’s assessed values (don’t get me started on that one). Zillows Zestimates are consulted and considered. These stats and metrics are all great tools but the bottom line is that the best time to buy is when there the market is down and when other buyers are on the sidelines waiting for the overall market psychology to change from negative to positive and by the time it does it is too late. As with the stock market – the most profitable time to buy is in a crash or immediately after – not when the talking heads are waxing market positives or the day of a 200 point improvement in the Dow.

Prices are already at lows, interest rates are at lows, there is an ample supply and the market is rich with repos and unwanted properties. Is it possible that many current qualified buyers have analysis paralysis and are waiting for a better opportunity to jump into the market?