In an attempt to encourage consumers to buy a home now, the federal government has just expanded and extended the homebuyers tax credit. Most people assume there is a mammoth supply residences ready to be sold just waiting for home buyers to make an appearance . Sadly it’s not that straightforward. Several consumers 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 aren’t a lot of properties available to a home buyer trying to put 10% or less down and qualify for a loan. The type of buyer who is able to buy a home is restricted by the seller’s situation.

Properties Owned by Banks

A large inventory of foreclosed properties is offered for sale as we enter 2010, and the near future will bring more.

lenders want to sell homes immediately once they’ve finally completed the prolonged foreclosure process, obtained clear title and moved any residents out. They price it to sell and agree to an offer that will close quickly, even if it’s not at the top price. As a result that buyers who can pay cash, or at least have a large down payment and preapproval, get the house. These are usually investors.

Pre-Foreclosure Sales

Many under water homeowners try to sell their homes as a short sale to salvage their credit. This kind of sale must have the approval of the mortgage company that is to accept less than the loan balance as payment in full. Lenders, however, often are not anxious to do this. Buyers often wait months for bank approval, and may never get it. Those who can afford to wait and don’t mind the uncertainty of not knowing whether they’ll get the house usually make low offers on short sales. 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

New home builders aren’t making nearly as many new houses as they once were. They are able to hold off and wait to develop their land when prices appear to be on the rise. But they are building and selling some homes, and these are a great option for would be homeowners.

Equity Sales

If a homeowner has equity in his home, they often choose to wait. They understand that home values have plummetted since the highs of a few years ago. They expect prices to rise again after the market reaches the bottom and all the short sales and foreclosures have worked their way through the system. A few realize that it’s an ideal time to move up - if they have stable income. They’ll come out ahead because values of superior houses have dropped more than prices of less expensive properties. Relocating employees may often have to sell regardless of market conditions.

Homes Available to Would-Be Homeowners

A good number of consumers buying a home to live in need to get together a minimum down payment and get a mortgage loan. This process takes time, and some of the time sales don’t make it to the closing table. Recent alterations of appraisal rules have exacerbated the situation. Lenders will loan a maximum of 80%, 90% or 96.5% of the appraised price, and lately appraisals have been below the agreed price. Many sellers do not have the opportunity to wait for a purchaser to go through this process, especially when it’s a real possibility that they won’t close in the end. Consequently, they’re 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 consent on a sale. This doesn’t work well for a buyer who needs a place to live. This leaves a small number of equity listings and new homes as the only practical choices.

What Housing Markets Are Most Affected

The communities that are most impacted by this shortage of homes are those that saw inflated prices just before the troubles began, including properties in Las Vegas or Albuquerque, new homes in Chula Vista, and any homes in areas where sub-prime loans were widespread. Anyone trying to buy Orange County, Los Angeles, Riverside or San Diego new homes will discover shortly that California has been one of the hardest hit housing markets. It also happens to be one of those that most needed a market correction.

Written by Horace Lenning motorcycle insurance comparison