Shortage Of Homes Obtainable For Young Buyers
In an effort to jump start the real estate market, the state of California has recently extended the tax credit for buying a new home. Most people assume that getting buyers to come back to the party will get things moving again, since there are a lot of homes on the market. The problem is a little more complicated than that. These days many real estate buyers find that they are not the only buyer when they make an offer on a home. That’s because there aren’t many houses accessible to a young family who want to put 10% or less down and qualify for a loan. The kind of purchaser who is able to buy a home is limited by the owner’s situation.
Bank Owned Properties
A huge supply of foreclosed properties is being marketed as we enter 2010, and the near future will bring more.
When mortgage companies have finally completed the foreclosure process and they have clear title to a vacant home, they want to get it sold immediately. They price it to sell and take a buyer that will close quickly, even if it’s not at the top price. Consequently that buyers who can pay cash, or at least have a large down payment and preapproval, get the house. These are often investors.
Foreclosure Avoidance Sales
Many homeowners who can’t sell their properties for more than they owe on them try to salvage their credit with a short sale. The lender must agree to accept less than the loan balance as payment in full in order for this sort of sale to go through. Lenders would rather not to do this, and regularly allow a home to go into foreclosure before accepting a short sale. Buyers often wait months for bank approval, and may never get it. Buyers are making low offers on short sales, knowing that if they can hold out, they may eventually get the home. Investors are much more likely to accept such a scenario than are people who need to find a home to live in.
New Construction
Home builders have reduced construction in these difficult 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.
Normal Sales
A good number of homeowners who owe less than their house is worth are sitting tight. They know that home values have plummetted since the highs of a few years ago. They expect prices to rise again after the market hits bottom and all the distressed sales 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 stable income. Prices of better homes have decreased more than their house has, so they can do well by buying and selling in a bad market.
Homes That Typical Home Buyers Can Get
A good number of consumers buying a home to occupy must scrape together a down payment and obtain a home mortgage loan. This process is time consuming, and occasionally sales fall out of escrow. Recent changes in appraisal rules have made the situation more challenging. Banks will only loan up to 80%, 90% or 96.5% of the appraised price, and in the last few months appraisals have been coming in below the agreed price. Most distressed sellers do not have the opportunity to wait for a buyer to go through this process, especially when it’s very possible that they won’t be able to close at the end. Consequently, they’re selling to investors instead. Some sellers take a very long time to get bank consent for a proposed sale. This just isn’t an option for a family in need of a home. This leaves a few equity listings and new homes as the only realistic options.
Which Markets are Experiencing this Problem
The most impacted communities are those that had inflated prices just before the recession, including houses in Tucson or Albuquerque, new homes in San Marcos and any homes in areas where sub-prime home loans were prevalent. Anyone trying to buy new homes in San Diego, Los Angeles or Riverside will learn quickly that Southern California has been one of the most affected markets. It was also one of those most in need of a return to reasonable prices.
Written by Hannah Valez San Diego New Homes
categories: real estate,new homes,foreclosures
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