In the most recent earnings call from HOME DEPOT (a valuable indicator of the health of consumer sentiment and a good insight into the mood of things related to housing and home improvement), the CEO described the mood of consumers in a manner that many of us in the real estate sphere experience daily, a consumer delaying decisions..... or as he stated: "a deferral mindset'.
I too see many people on hold right now for several reasons:
1. Awaiting the promise of lower mortgage rates.
2. Awaiting the real consequences of tariffs on inflation which could keep mortgage rates elevated.
3. Awaiting the consequences on A.I. and whether this could impact their employment. And income.
4. Nervous about equity markets now back up at or near record highs.
5. Continued global geopolitical uncertainty and wars.
6. Expanding political division and anger with new, big shifts brewing. If local taxes increase, by how much? If local insurance costs or real estate taxes keep going up, by how much?
7. Sellers seeing some prices come down waiting for them to rise again.
8. Buyers hopeful home prices will come down ...and come down further if the economy weakens. And if the economy weakens, will they lose their job?
9. If the cost of tariffs are eaten by corporations and their profitability declines, will stock prices/valuations drop too?
The above nine pointers could make anyone nervous, or at the very minimum provide enough excuses to defer a big decision like selling or buying a home. It should come as no surprise that many are in this 'deferral mindset'.
The reality? Reality sooner or later sets in that while many of the above questions will be answered eventually, they will be replaced with new questions, new doubts, and in all this we keep running out of time. Time to live, enjoy, experience, etc. Time is the last luxury. All of the above concerns are very real, so it is important never to belittle them. But it's equally important to place them into context. Analysis paralysis is real. Life always keeps marching on, the clock never stops.
Here are some examples:
1. If rates drop lots, chances are it's because the economy is weakening.
2. If rates drop lots, many of those who deferred making a move will step in and that usually causes prices to rise. And inventories/choice to dissipate.
3. If inflation continues to remain sticky, replacement costs will rise too.
