Wednesday, July 22, 2009
First Time Home Buyers Struggling with Foreclosures
First Time Home Buyers Struggling with Foreclosures. For the past couple of months I’ve been writing about the surge in home sales in Silicon Valley and the fact that inventory of homes available for sale has been dwindling. That fact has broken through to a whole new level. After reviewing last week’s sales figures, it became apparent that the number of homes that are pending (sold, but awaiting closure) exceed those actually available for sale. Let’s state it this way. This means that more buyers that have bought homes and are waiting for them to close than there are homes remaining for sale. Be prepared for a quick run up in prices. For first time home buyers, REO properties (foreclosures) are very difficult to obtain. Because of the way banks price properties, their listing prices are several months old. When there’s a run up in prices, there are multiple offers for these underpriced properties. That puts Jack and Jill first timer at a disadvantage because they are typically coming in with less down payment than investors. And because of the volume of offers, the banks are selecting the offers with most or all cash with no contingencies, something a first timer rarely can keep up with. I keep hearing that there’s another wave of foreclosures coming, but I still haven’t seen them. For the next quarter, I’d suggest that first timers consider narrowing their search to looking at properties with traditional sellers that have been on the market a while, unless they have a lot of cash.