Homebuyers get picky in tight market

<p>Before the recession, people simply looked for a house to buy.</p><p>Later they got squeamish just thinking about buying. Now they are on a quest for perfection at the perfect price.</p><p>Exacting buyers are upending the battered real estate market, agents and other experts say, leading to last-minute demands for multiple concessions, bruised feelings on all sides and many more collapsed deals than usual.</p><p>Everyone expected the housing market to suffer at least a temporary hangover after the government's $8,000 tax credit expired, but not necessarily this much. Preliminary data from around the country indicate that the housing market began swooning last month immediately after the credit was no long available. In some places, sales dropped more than 20 percent from May 2009 when the worst of the financial crisis had subsided.</p><p>Builders have been affected too. Construction of new homes in May dropped 17.2 percent from April, the Census Department said Wednesday, significantly lower than forecast. Permits for future construction dropped 10 percent, suggesting a cruel summer.</p><p>Even the lowest home mortgage rates in decades are not doing much to invite deals. The Mortgage Bankers Association said Wednesday that applications for loans to buy houses were down by a third compared with last year. Applications are back to the level of the mid-1990s, when the country's housing market was smaller.</p><p>In some cases, agents say, sellers literally cannot afford to make concessions. Another $10,000 will push them underwater, which means they will have to arrange the sale through the bank.</p><p>The tax credit, for all its flaws, may have helped avert financial Armageddon, but the final effect is still being tallied.</p><p>In Indianapolis, the number of contracts signed in May was down 32 percent compared to May 2009. They dropped nearly 25 percent in Minneapolis/St. Paul, 20 percent in Seattle, 10 percent in Sacramento and 42 percent in Hartford, Conn. (A few areas, including Miami, showed improvements.) Pending contracts, if they are not canceled at the last minute, become official in six to eight weeks. Many deals done in April, when the credit was in effect, are still being completed and will be counted in May or June sales reports. So the severity and extent of the current slump will not become clear until fall.</p><p>The optimists, and real estate remains full of them, say the trough is temporary. The stimulus might have stolen sales from May but by July, they argue, people will need to buy again. Indeed, the Mortgage Bankers Association's purchase application index ticked up slightly this week after five weeks of decline, although the association declined to say the index had bottomed out.</p><p>Information about scuttled deals tends to be anecdotal but Mike Lyon of Lyon Real Estate in Sacramento estimates from 15 percent to 17 percent of sales in his area are falling apart at the last minute as sellers prove unable or unwilling to give buyers what they want. In a normal market, he said, the figure is about 5 percent.</p><p>"This is the fallout from all the foreclosures: Buyers think that anyone who is selling must be desperate," said Lyon, who employs about a thousand agents. "They walk in with the bravado of, 'The world's coming to an end, and I want a perfect place.' " (END OPTIONAL TRIM.) The tax credit, for all its flaws, may have helped avert financial Armageddon, but the final effect is still being tallied.</p><p>In Indianapolis, the number of contracts signed in May was down 32 percent compared to May 2009. They dropped nearly 25 percent in Minneapolis/St. Paul, 20 percent in Seattle, 10 percent in Sacramento and 42 percent in Hartford, Conn. (A few areas, including Miami, showed improvements instead of declines.) Pending contracts, if they are not canceled at the last minute, become official in six to eight weeks. Many deals done in April, when the credit was in effect, are still being completed and will be counted in May or June sales reports. So the severity and extent of the current slump will not become clear until fall.</p><p>The optimists, and real estate remains full of them, say the trough is temporary. The stimulus might have stolen sales from May but by July, they argue, people will need to buy again. Indeed, the Mortgage Bankers Association's purchase application index ticked up slightly this week after five weeks of decline, although the association declined to say the index had bottomed out.</p><p>(STORY CAN END HERE. OPTIONAL MATERIAL FOLLOWS.) John P. Johnson of Des Moines, Iowa, will continue to hope, as he has for more than two years now, for a market that is healthy enough to supply him with a buyer. His house, built in 1981, is too recent to be charming and too old to be new.</p><p>"When we upgraded the kitchen, we put in Corian countertops, which were fashionable at the time, but now they all want granite," he said.</p><p>He had one offer in the fall, which fell apart when the buyer made too many demands (a shaved sales price plus paying the closing costs and all their other fees). Despite another price cut to $204,000, only one couple showed up at the most recent open house.</p><p>His agent tells him the market is dead. The number of contracts signed in Des Moines in May was down 47 percent from last year.</p><p>"Keeping this house ready to sell is a full-time job," said Johnson. "I never thought I'd be spending my retirement doing this."</p><p>NYT-06-16-10 2053EDT</p>