The California homebuyers tax credit was recently extended in an attempt to get buyers back into the market. Many believe that bringing willing buyers back to the party will get home sales off the ground, because there are a ton of residences ready to be sold. That really isn’t the case. Several home buyers write an offer on a property, only to find that they are not the only one who wants to buy it. That’s because there are very few houses accessible to home buyers trying to qualify for a loan with a small amount down. The owner’s situation restricts the type of purchaser they can accept.

Bank Owned Homes

There is a large inventory of homes owned by banks on the market at the beginning of 2010, and more will be listed in the months to come.

lenders want to sell homes immediately once they’ve finally completed the prolonged forclosure process, obtained clear title and moved any residents out. They offer it at or below market value and agree to a buyer that will close quickly, even if it’s not at the best 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.

Foreclosure Avoidance Sales

Many homeowners who can’t sell their properties for more than their loan balance try to salvage their credit with a short sale. The lender must agree to forgive a portion of the loan for this sort of sale to be accepted. Unfortunately lenders are not anxious 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.

New Construction

Home builders have slowed down construction in these tough 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

The majority of owners who owe less than their house is worth are sitting tight. They know that home prices have declined a lot since the peak of a few years ago. They look forward to prices rising again once 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 an ideal time to move up to a bigger home – if they have stable income. Prices of larger homes have weakened more than their house has, so they can do well by selling and buying in a bad market.

Homes That Typical Home Buyers Can Get

A good number of people buying a home to occupy must scrape together a minimum down payment and get a mortgage loan. This is time consuming, and some deals don’t make it to the closing table. Recent changes to appraisal rules have exacerbated the situation. Lenders will only loan up to 80%, 90% or 96.5% of the appraised price, and in recent months appraisals have been lower than the agreed price. Many distressed sellers don’t have the option 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. As a result, they are selling homes to buyers who can bring a significant down payment to the sale. Some sellers take an extended period of time to get lender authorization for an offer. This just isn’t an option for a family in need of a home. This leaves a relatively small selection of equity listings and new homes as the only realistic options.

What Areas Are Most Impacted

The most affected real estate markets are those that experienced exaggerated prices just before the recession, including houses in Phoenix or Tampa, new homes in Carlsbad and any homes in areas where sub-prime home loans were popular. Anyone trying to buy new homes in San Diego, Los Angeles or Riverside will soon learn that California has been one of the worst housing markets. It was also one of those most in need of a return to reasonable prices.

Written by Hannah Valez San Diego New Homes