A Home Shortage? Really?
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In an effort to get buyers back into the market, the state of California has recently extended the tax credit for purchasing a new home. Most people imagine that enticing buyers to show up will get things moving again, because there are a lot of residences available for sale. That's actually not the case. Countless home buyers tender an offer on a home, only to find that they are not the only one who wants to buy it. That's because there are very few properties accessible to home buyers who want to buy with a small down payment and questionable credit. The type of buyer who can buy a home is limited by the owner's circumstances.
Homes Owned by Banks
There are a lot of real estate owned being marketed now, and they will continue to flood the market for quite a while.
lenders want to sell homes rapidly once they've finally completed the prolonged forclosure process, obtained clear title and moved any residents out. They price it to sell and take a buyer that will close quickly, even if it's not at the highest price. As a result they're selling to investors who can pay cash, or at least have a significant down payment and a lender ready to go.
Pre-Foreclosure Sales
Many homeowners who owe more on their mortgages than their homes are worth try to sell their properties as a short sale to save their credit. This kind of sale must have the approval of the bank who is to forgive a portion of the loan. Unfortunately lenders usually aren't eager to approve such sales. 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.
Brand New Homes
Home builders have scaled back 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.
Equity Sales
For the most part homeowners who are not upside down on their mortgage are sitting tight. They understand that home values have fallen a lot since the peak of a few years ago. They look forward to prices rising again after the market reaches the bottom and all the foreclosures and short sales have worked their way through the system. A few are figuring out that it's a good point in time to trade up to a more expensive home - if they can afford to do so. Prices of better homes have decreased more than their property has, so they can do well by buying and selling in a down market.
Homes Available to Would-Be Homeowners
Most people purchasing a home to occupy have to come up with a down payment and qualify for a home mortgage loan. This doesn't happen instantly, and some deals don't make it to the closing table. Recent alterations of appraisal rules have made things worse. Mortgage companies will loan a maximum of 80%, 90% or 96.5% of the appraised value, and in the last few months appraisals have been coming in under the agreed price. Many distressed owners do not have the luxury of waiting for a purchaser to go through this process, especially when it's very possible that the sale won't close at the end. So, they are accepting offers from cash buyers instead. Some sellers take a very long time to get lender authorization on a proposed deal. This doesn't work well for a buyer who needs a place to live. This leaves a relatively small selection of equity listings and new construction as the only reasonable choices.
Where is This Problem the Most Pronounced
The communities that are most affected by this shortage of homes are those that saw exaggerated home values just before the troubles began, including houses in Phoenix or Orlando, new homes in Chula Vista and any homes in areas where sub-prime loans were prevalent. Anyone trying to buy Riverside, Los Angeles, Orange County or San Diego new homes will shortly find out that California has been one of the hardest hit housing markets. It was also one of those most in need of a return to reasonable prices.
Article Source: Articlelogy.com
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