Would-Be Homeownere See Lack of Inventory Homes

Home sales have been very slow for many months. Fewer sales are closing, so the state of California has extended the homebuyers tax credit in an attempt to encourage consumers to buy a home now. People think there are a ton of houses available for sale and the only thing missing is buyers . The problem is a little more complicated than that. Countless real estate buyers write an offer on a home, only to find that they are not the only one who wants to buy it. That\’s because there is a very limited supply of properties available to home buyers who want to put 10% or less down and qualify for a loan. The owner\’s circumstances limits the type of purchaser they can accept.

Foreclosed Homes

A huge inventory of foreclosures is offered for sale now, and the months to come will bring more.

When mortgage companies have finally completed the foreclosure process and they have clear title to a vacant house, they want to get it sold promptly. They offer it at or below market value and take a buyer that will close quickly, even if it\’s not at the highest price. This means that buyers who can pay cash, or at least have a large down payment and preapproval, get the house. These are frequently investors.

Short Sales

Many under water homeowners try to sell their houses as a short sale to salvage their credit. The lender must agree to accept less than the loan balance as payment in full for this sort of sale to go through. Unfortunately lenders aren\’t eager to approve such sales. 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. 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.

Brand New Construction

New home builders aren\’t making nearly as many new homes as they once were. They can wait and not develop the land they own until prices rise. But they are building and selling some homes, and these are a great option for would be homeowners.

Normal Sales

If a homeowner has equity in his home, they often choose to wait. They recognize that home prices have plummetted since the peak of a few years ago. They expect prices to rise again once the market hits bottom and all the short sales and foreclosures have worked their way through the system. A few know that it\’s a good time to move up – if they have stable income. Prices of more expensive homes have declined more than their property has, so they can do well by selling and buying in a bad market.

Homes Available to Would-Be Homeowners

Many people buying a home to live in need to get together a down payment and secure a mortgage loan. This process takes time, and some of the time deals fall through. Recent alterations of appraisal guidelines have exacerbated the situation. Banks will loan a maximum of 80%, 90% or 96.5% of the appraised value, and in recent months appraisals have been under the contract price. Most distressed owners don\’t have the luxury of waiting for a purchaser to go through this process, particularly when it\’s a real possibility that the sale won\’t close at the end. So, they are selling to buyers who can bring a significant down payment to the sale. Some sellers take a very long time to get lender authorization on a sale. This just isn\’t an option for a family in need of a home. This leaves the few equity listings and new construction as the only realistic options.

Where is This Crisis the Most Obvious

The most impacted geographic areas are those that had overstated values just before the recession, including properties in Tucson or Albuquerque, new homes in Chula Vista and any homes in areas where sub-prime mortgages were prevalent. Anyone trying to buy new homes in San Diego, Los Angeles or Riverside will discover shortly that California has been one of the worst markets. It was also one of those most in need of a return to reasonable prices.

Written by Hannah Valez San Diego New Homes mortgage rates to buy a home

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