Real Estate Demand: Who is Going to Buy?

In this world of post tax credits that has pulled forward real estate demand just enough to avoid a double dip, who is left to buy real estate? Trulia: A quarter of home renters won’t ever buy

More than a quarter of people who rent a place to live do not plan to buy a home — ever, according to a survey by real estate information business Trulia Inc.

San Francisco-based Trulia found that 27 percent of renters don’t ever plan to buy and that two-thirds of those who do plan to buy will wait more than two years. Such postponed buying could delay the U.S. housing market’s recovery, Trulia said.

The market could use some help. The Kansas City Regional Association of Realtors reported this week that Kansas City-area home sales plunged by more than a third in July, reflecting market stabilization after the expiration of the federal home buyer tax credit.

“Renters converting into buyers are crucial to turning around the housing slump,” Trulia CEO Pete Flint said.

When asked what could influence them to buy a home in the next year, respondents listed several factors, the top three of which were:

• Being able to save for a down payment (47 percent)

• Getting a new job (28 percent)

• Low or lower interest rates (27 percent)

So here's the big stat 27% don't plan on buying a home and 66% don't plan on doing it for at least 2 years.

If all we need to know about the real estate market it is the above data point because it equals very little demand for the real estate market. It's just simple economics, lower demand does not equate to an entrenched bounce in real estate values.

It's going to be a long time before this country sees any kind of prolonged demand for real estate. It's so difficult to save a 20% down payment, especially if you live in a part of the country where the average home is $250K and higher. There aren't many people who have $50K or more.  And why would you put that down on a real estate purchase in a world where cash is king?

Real Estate should be an asset that's an avoid. In fact, real estate is not an asset at all if it's your primary residence, no it's a liability: Your primary residence generates no cash flow, and it has the liability of interest, taxes, insurance and maintenance. It's a money pit that renting does not come with at all.

Hope all is well

J.D. Rosendahl, Rosey