And as for people trying to buy when prices were going up, Google "greater fool theory." Plus, people feel far more confident if they're following the herd. If everyone else is buying, it must be the right time to buy. If everyone is bidding up the price of houses, that must be the right thing to do. And once they saw their neighbors buying a house for $300,000 and selling it a year later for $450,000, they wanted to get in on the action, too. Greed had something to do with it.
Now there's fear. Lot of potential buyers are hunkered down. That's what's happening.
Then there are the insurance companies ,refusing to write new policies in certain areas & canceling existing policies .
Then there are some banks again requesting minimum of 10% down for 1st time home buyers !!!!!
Not to mention the amount of conditions that must be satisfied before a final mortgage approval , buyers basically must provide information on their family tree before their loan will be considered.
Bottom line is the buyers are available but the banks aren't lending & insurance companies are redlining + the appraisal values are less than the contracted price et. etc.
If tghey don't need to buy, they're sitting. The sellers need to forget the boom years, too.
How many people did not get stuck with a house that is worth hundreds of thousands of dollars less this year? Now they have no money and can't make a move.
Bought a home in late 07 from Weichert Relo.
Would have been happy to finance my 417K thru them, too.
They approved my loan but wouldn't match another prospective
lender and waive about $600 in closing costs!
No skin off my back, I went elsewhere.
I realize this does restrict the number of buyers, but the problem is more that housing is unaffordable more than buyers have been unfairly restricted.
Andre said: "Then there are some banks again requesting minimum of 10% down for 1st time home buyers !!!!! "
This is a bad thing? The banks are lending you money and if you have no skin in the game, what is the motivation to pay it back. The contracts written in 2003-2006 with all these bizarre mortgage products were moronic and its coming home to roost now with the market decimation especially in places like california that had huge numbers of exotic mortgages. 10% down should at least make people think 3 or 4 times before mailing the keys to the lender.
You are correct that there are not many buyers, but I disagree with the board that funding is the primary reason. In my opinion, while the reduction in funding is playing a role, the larger factors are:
1. Sellers aren't selling, and when sellers sell they become buyers. We all know that down markets benefit people getting in, and hurt people getting out. Here in the Northeast, it seemed as if every house for sale was the result of an older couple selling and buying a house in Florida and a condo up here. People had so much equity in their homes that this was possible. So, when they moved, they became buyers of condos here, and homes in Florida. Now, most people are not selling unless they have to, so they are not becoming buyers. When I was looking for a house a year ago, I knew exactly where I wanted to live, how much a house in that neighborhood would cost (give or take $50,000), and knew that there where about 100 of the homes I wanted in that neighborhood. But, none were for sale because nobody needed to sell. So, I sat on the sideline waiting.
2. Young starter families are waiting to see what will happen with the market. They are afraid of buying now and losing any equity in the first year. Starter families are, in my opinion, the most important part of the real estate cycle as they are needed to buy the small homes that people are selling when they want to move up to the bigger home. If the buyers are not there to purchase the starter home, the next family can't sell and buy the bigger home.
And then, when the starter families decide to buy, is when the lack of financing plays a role.
In terms of financing, I agree that guidelines have tightened without question, additional appraisals are ordered - overall, everyone is concerned with trying to get it right or covering their backside. But we are getting deals done - is it more difficult, YES, and it requires a great deal of effort to keep the calm so that all parties stay the course.
Do I think it is a great time to buy? YES, and I tell my buyers so. I'm doing some deals but it is tough to get folks to act!
its the fed cuts and so.The banks will be at loss if they provide loans at present.but how long would they not lend money.they cannot survive too with closed doors.So hopefully after the election in 6 months I strongly beleive the market will stabilize.So asking 10% down shoudnt be a problem.If buyers want home they have to put min down.I am a home owner.I want to sell Its still in the market since a month.I too want to sell.hardly 4 buyers visited and no offer but all liked my home.
Its the bank..I am here in this property for 4 years now.I have spent enough ....I cant sell it for loss thouhg.
once bank open doors it should be fine.So lets see.