Shortage of Houses for Would-Be Homeowners

In an effort to encourage consumers to buy a home now, the federal government has recently extended though April and expanded to include move-up home buyers the tax credit for purchasing a home.  Many believe there are a lot of homes on the market and buyers are the only missing component . Unfortunately it’s not that simple. These days many consumers find themselves in multiple-offer scenarios when they make an offer on a property. That’s because there is a very limited supply of houses accessible to a young family who want to buy with a small down payment and questionable credit. The sort of purchaser who can buy a home is limited by the owner’s situation.

Homes Owned by Lenders

There is a large inventory of bank owned houses being marketed as 2010 begins, and the months to come will bring more.  Banks want to sell homes rapidly once they’ve finally completed the prolonged foreclosure process, obtained clear title and moved any residents out. They offer it at or below market value and accept a buyer that will close quickly, even if it’s not at the highest price. This means they’re selling to investors who can pay cash, or at least have a significant down payment and a lender ready to go.

Foreclosure Avoidance Sales

Many homeowners who owe more on their mortgages than their homes are worth try to sell their houses as a short sale to save their credit. The lender must agree to forgive a portion of the loan in order for this sort of sale to go through. Lenders would prefer not to do this, and frequently allow a home to go into foreclosure before accepting a short sale. It often takes months and months to get approval – if ever.  Buyers are making low offers on short sales, knowing that if they can hold out, they may eventually get the home. This is a sale that’s more suited to investors than to homeowners who need a place to live in a reasonable amount of time and with some predictability.

Regular Sales

For the most part homeowners who are not upside down on their mortgage are sitting tight. They recognize that prices have plummetted since the peak of a few years ago. They look forward to prices rising again after the market hits bottom and all the short sales and foreclosures have worked their way through the system.  A few understand that it’s a good opportunity to move up to a bigger home – if they have steady jobs and can qualify for a mortgage. {Prices of superior homes have dropped more than their house has, so they come out ahead by buying and selling in a down market.|They’ll come out ahead because prices of more expensive homes have fallen more than prices of less expensive houses Relocating employees may often have to sell regardless of market conditions.

New Construction

Home builders have slowed down construction in these challenging economic times. They can wait and not develop the land they own until prices rise. There are some new homes available, and home builders are often very willing to work with buyers who are short on cash and need a lot of time. The builder of these San Marcos new homes is offering to pay closing costs plus a 1% incentive.

Homes That Would-Be Homeowners Can Buy

Most people purchasing a home to live in must get together a down payment and obtain a home loan.This is time consuming, and some of the time sales fall through. Recent changes to appraisal rules have made the situation more challenging. Mortgage companies will only loan up to 80%, 90% or 96.5% of the appraised value, and recently appraisals have been coming in under the contract price.  Many sellers do not have the opportunity to wait for a borrower to go through this process, especially when it’s a real possibility that they won’t be able to close at the end.  So, they’re accepting offers from buyers who can bring a significant down payment to the sale. Some sellers take an extended period of time to get bank approval on a proposed deal. This doesn’t work well for a buyer who needs a place to live.  This leaves the few equity listings and new construction as the only logical options.

What Housing Markets Are Most Affected

The communities that are most affected by this seller’s market are those that had overblown home values before the bottom fell out, including houses in Las Vegas or Tampa, new homes in San Marcos and any homes in areas where sub-prime loans were popular. Anyone trying to buy Riverside, Orange County, Riverside or San Diego new homes will shortly learn that Southern California has been one of the hardest hit areas. Co-incidentally, it was one of those in desperate need of a return to affordable home prices.