While headlines this week indicate that the housing market might finally be turning in home buyers’ favor, it seems that there’s an epidemic of cold feet going around. Mario Greco, founder of the MG Group at Compass real estate in Chicago joined WBBM Newsradio’s Rob Hart on the Noon Business Hour to discuss the trend.
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“The uncertainty that is being introduced by economic policy as well as geopolitical gyrations makes – is making buyers really think twice about moving forward, especially after they realize that they’re paying top dollar,” Greco explained.
Fortune reported this week that mortgage rates are trending down slightly this year, but it noted that conditions are still much harder for home buyers than before the COVID-19 pandemic. Though Greco said he saw “cold feet” at the start of the pandemic, there was soon a nationwide boom in home sales amid lockdown orders and the Federal Reserve Bank’s lowering of interest rates.
Following the roller coaster of the pandemic era, the U.S. has been trapped in a period of high inflation and increased interest rates. With the economic uncertainty Greco mentioned stemming from President Donald Trump’s tariff wars to actual wars waging, there’s now a more sustained vibe of unease among potential home buyers.
“Now it’s more… kind of something in the back of people’s minds. It’s more… like a rumble,” said Greco. “It’s more of a cautionary situation, but it is similar [to the early pandemic] in that there is definitely some pullback on buyer's eagerness to move forward.”
According to the National Association of Realtors, there was a 0.4% decrease in home sales this July compared to last July. NAR Chief Economist Lawrence Yun said that buyers are hesitant.
Greco told Hart that out of 60 deals recently brokered by his team, around a dozen fell through when buyers decided to walk away. All of the transactions were under $300,000 – typically around the price range for first time buyers.
These “first time home buyers – likely early in their professional career – are also worried about whether they’re going to have a job. You’ve been a lot of job hugging, as that’s been called, as well as fear of AI replacing these entry-level jobs,” said Greco.
However, he’s said more seasoned real estate buyers are also feeling unsure about buying right now.
“You also see similar trepidation for some with someone who’s maybe bought three or four or five times because economic uncertainty affects everybody and the older buyer who’s maybe spending more money can ill afford a mistake late in life just like that a first-time buyer doesn’t want to make a bad mistake starting out,” Greco explained.