The real estate market right now for Buyers is difficult. Inventory is low. Most of the houses that you see with real estate signs hanging in front of them are under contract. Many properties are receiving multiple offers. As a Buyer, be prepared to make aggressive offers to compete with the other buyers. Many buyers are losing out on homes and having to make offers on several homes before getting under contract.
Why is inventory low? The lenders are currently foreclosing on homes and not immediately placing them all back on the market. They are "holding" homes and slowly releasing them. As a result, we have been told that Bank of America alone has approximately 14 million homes that they foreclosed on , but have not placed back on market. We call these homes "shadow inventory". The report says that 85% of these homes are in California, Nevada, Florida and Arizona. And, this is just one lender. The other big players, Wells Fargo, JP Morgan Chase, Citimortgage, etc., are also carrying shadow inventory.
Why all this shadow inventory? The banks are attempting to drive the prices upward to lessen their loss on these foreclosed homes. If the market becomes flooded with new listings, prices will be driven lower. Due to the slow trickle of these homes back to the market, we can see that our current real estate market situation will continue for a few more years. So, if your credit is not perfect now, it is time to seriously concentrate on correcting it.
How do the lenders decide which homes to place back on the market? We don't know. This makes it extremely frustrating for buyers who have their eye on a particular foreclosed home and want to know when it will be for sale.
As a result, many Buyers are now purchasing short sales. These Buyers understand the short sale time lines and are now willing to wait for the completion of the process.
Is it still a good time for Buyers? ABSOLUTELY! The prices are the lowest they have been in years and so are the interest rates. This market just requires a bit more patience. So Buyers, be realistic and persistent and you will be able to take advantage of this unique real estate scenario. And years from now, you will patting yourself on the back!
