The homebuyers tax credit was just extended though April and expanded to include move-up home buyers in an attempt to get the residential real estate market moving again.  Most people think that getting buyers to come back to the party will get home sales off the ground, because there is an oversupply residences available. The problem is a little more complicated than that. A lot of home buyers tender an offer on a house, only to find that they are not the only one who wants to buy it. That’s because there is a sparse selection of properties accessible to a buyer who want to put 10% or less down and qualify for a loan. The seller’s circumstances determines the kind of consumer they can sell to.

Lender Owned Homes

There is a huge supply of foreclosed properties available as we enter 2010, 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 as soon as possible. They price it to sell and take a buyer that will close quickly, even if it’s not at the best 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 under water homeowners try to sell their homes as a short sale to save their credit. This kind of sale needs approval of the lender who is going to forgive a portion of the loan. Lenders, however, aren’t eager to do this. 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.

New Homes

Home builders are not building 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.

Equity Sales

Many people who can afford

to continue making their house payments are not moving. They know that values have declined a lot since the peak of a few years ago. They expect prices to rise again once the market reaches the bottom and all the foreclosures and short sales have worked their way through the system. A few understand that it’s a good point in time to trade up to a more expensive home – if they have stable income. Prices of better homes have declined more than their property has, so they come out ahead by buying and selling in a down market.

Homes That Would-Be Homeowners Can Buy

Many people looking for a home to occupy need to put together a down payment and apply for a home loan. This process is time consuming, and sometimes sales fall out of escrow. Recent changes to appraisal guidelines 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 under the contract price. Many distressed owners do not have the option of waiting for a purchaser to go through this process, especially when it’s a real possibility that they won’t qualify for the loan at the end. As a result, they are accepting offers from cash buyers instead. Some sellers take a very long time to get bank authorization for a sale. This just isn’t an option for a family in need of a home. This leaves the few equity listings and new homes as the only logical options.

What Geographic Areas Are Most Affected

The most affected communities are those that experienced inflated home values just before the recession, including properties in Phoenix or Abluquerque, new homes in Chula Vista, and any homes in areas where sub-prime loans were common. Anyone trying to buy Los Angeles, Orange County, Riverside or San Diego new homes will quickly discover that California has been one of the hardest hit markets. It was also one of those most in need of a return to reasonable prices.

Post to Delicious Post to Reddit