The first new casualty in the housing wars has appeared… and it isn’t the one we wanted at all. By all accounts the first to fall by the wayside in the current cycle of the housing market is…
…the first-time homebuyer! Well that certainly sucks, doesn’t it?
More and more, our market is swinging toward the investor/cash buyer over the first-time buyer for one simple reason – CASH! Money talks and the rest of it walks. Is that bad? Well, it’s too bad but not necessarily bad. After all, over 70% of current buyers plan to be owner-occupants and that’s good. Just because they have cash doesn’t necessarily equate to investors and rentals – although savvy investors are in the market too. But the lions share of it is people who’s timing was inspired. They got out near the peak and rented for a couple years. Today they can buy their old house back for half-price or buy a nice new spread for the same price.
I feel for the 1st timers. There was a brief window there when they ruled the streets but with the current shortage of inventory that window has closed, at least in some markets. Imagine if you’re the bank and you’ve just listed a 2,000 SqFt place for $189,000. The first two days your agent gets 67 offers, many of them higher than asking price and nearly 1/3 of them from cash buyers.Well what are YOU going to do?
One the one hand you have your first time buyers who are scraping together the FHA Down, they need costs paid, they can close in 45 days and they’re offering your asking price.
On the other hand you’ve got a family who sold in 2006, banked the profit so they’ve got cash or close to it, they can close in 20 days and they’re offering $20,000 over asking price.
Even the banks in their current torpor can make that decision handily.
Sorry Mr. & Mrs. 1st Timer. Try writing another 20 offers hoping you’ll get lucky. And actually, that’s not bad advice. If you persevere you may eventually score – if you give up you definitely don’t. In the past 120 days nearly 17,000 homes have had their Notice of Default filed in Riverside County. Over 7,000 REO’s sold during that same period but most of those fielded multiple offers. It’s a fairly safe assumption that if the banks released this ‘shadow inventory’ of homes, the current market could absorb the influx with minimal impact on median price. Again, at least in our market. This would allow all the military and teachers, policemen, shop owners, young families and retired folks to get one more run at owning a home before the market heads back up.
So if you have been trying unsuccessfully to buy a house for awhile and find your offers coming up short time and again. Don’t despair. There’s still a gripload of homes lurking just over the horizon somewhere but you’re going to have to be quick to benefit. The mainstream media is starting to print scattered articles alluding to an improvement in our housing market. By the time they let you know the recovery has started, you’ll be a day late and at couple bucks short.Local prices have been stable or increasing snce last October.
We led the way down, we’ll be leading the charge back up as well. Under all is the land.