Born Again Buyers
Lately Jim the Realtor has been documenting the current "frenzy" of bidding and buying activity out there.
From what I can see, there are several key reasons for this "buying frenzy" (despite buyers likely being aware they are catching a falling knife), including:
1) Incredibly low inventory (in Long Beach, it's down 36% since last year!);
2) Government handing out free ponies with the First-Time Home Buyer tax credit (with a very loose definition of "first-time") which may expire in November;
3) Incredibly low (and reckless) down-payment requirements from the FHA;
4) People, like me, who have been priced out of the market for nearly a decade now (unless we took out wonky interest-only Option ARM suicide loans to buy properties at 6-10X income) and are simply tired of waiting and putting their lives and goals on hold (and I don't blame them); and
5) Prices seem pretty attractive compared to peak "values."
And I'm sure many of you have been asking yourself: Dang, with a 12.2% unemployment rate and stricter lending requirements, just how many new, qualified buyers can possibly be left?
Well, there was another factor that I hadn't really thought about. I heard on the radio tonight that a short sale only remains on your credit rating for a year-and-a-half.
A YEAR-AND-A-HALF!
That's nothing. And it means all the people who walked away Scot-free from their obligations when the shit hit the fan in 2007 and 2008 are suddenly born-again qualified buyers! So, with the FHA(IL) providing an avenue for the credit-challenged, low down-payment requirements (which can be satisfied by the FTHB tax credit), and incredibly loose definitions of a "qualified" buyer...the answer to the question of how many buyers are still out there is: A lot more than you can ever imagine.
From what I can see, there are several key reasons for this "buying frenzy" (despite buyers likely being aware they are catching a falling knife), including:
1) Incredibly low inventory (in Long Beach, it's down 36% since last year!);
2) Government handing out free ponies with the First-Time Home Buyer tax credit (with a very loose definition of "first-time") which may expire in November;
3) Incredibly low (and reckless) down-payment requirements from the FHA;
4) People, like me, who have been priced out of the market for nearly a decade now (unless we took out wonky interest-only Option ARM suicide loans to buy properties at 6-10X income) and are simply tired of waiting and putting their lives and goals on hold (and I don't blame them); and
5) Prices seem pretty attractive compared to peak "values."
And I'm sure many of you have been asking yourself: Dang, with a 12.2% unemployment rate and stricter lending requirements, just how many new, qualified buyers can possibly be left?
Well, there was another factor that I hadn't really thought about. I heard on the radio tonight that a short sale only remains on your credit rating for a year-and-a-half.
A YEAR-AND-A-HALF!
That's nothing. And it means all the people who walked away Scot-free from their obligations when the shit hit the fan in 2007 and 2008 are suddenly born-again qualified buyers! So, with the FHA(IL) providing an avenue for the credit-challenged, low down-payment requirements (which can be satisfied by the FTHB tax credit), and incredibly loose definitions of a "qualified" buyer...the answer to the question of how many buyers are still out there is: A lot more than you can ever imagine.
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