People Are Looking For Bargains In The Housing Market And Many Are Finding Disappointment Instead.

"A bargain is only a bargain if you can afford to pay the bargain price."
~ John M. Roberts ~

In years past, when the housing market went bust, you could pick up homes at bargain prices through short sales, foreclosures, and from people who were willing to accept lower selling prices because they just wanted to get a quick sale and move on. You could actually get a bargain on a home at a price you could afford to pay without undo hardship.

Today, things are markedly different. There are still bargains in the real estate market, but because of the number of people in default, some banks are actually reluctant to foreclose on all of them at one time. Lending institutions don't want to give the appearance of a foreclosure frenzy that could cause deeper concerns about the economy.

In essence, banks are actually trying to work with property owners to renegotiate mortgages through a government sponsored loan modification process. And like everyone else, banks are cautiously waiting to see what happens with the economy.

Although there are still many foreclosures for sale, it is not that great of a buyers market. Prices are still relatively high but just because a home is in foreclose, or is a bank owned property, it doesn't guarantee that you will get a bargain basement price.

• The reason. There are many people out there who want to buy property, including investors, which means that as a potential buyer, you may get caught in a bidding contest. When there are multiple offers on a home, the price goes up and the property will usually go the the buyer who has the most money, the best credit, and/or the highest income.

A bargain is only a bargain if you can afford to pay the bargain price. In today's housing market, it is just not feasible for many potential home buyers to purchase a home because, although homes prices have fallen, they haven't dropped to the point of affordability.

On top of that, many potential homebuyers are also finding it hard to get home loans. This is because many banks are reluctant to loan money, in many cases, even if the buyer is qualified. This means that the banks are not giving loans as willingly as they were just a couple of years ago.

As most of us already know, stated income loans are a thing of the past. Today, you have to prove that you can qualify for a home loan by showing the right amount of income and your credit score must be high enough to satisfy a lender that you are credit worthy and you can handle the monthly payments..

Many would be homebuyers are not making the money to actually qualify for homes. Unemployment is at it's highest point in many years, people have taken salary cuts or are working shorter work weeks to keep their jobs, and to make matters worse, the unemployment figures are still rising.

Banks remember what happened to get them in trouble in the first place, like giving stated income and subprime loans. They don't want to start making a lot of subprime or stated income loans again because they are well aware of the negative consequenses, plus, banks are being monitored very carefully by federal and state agencies in an effort to prevent bad lending practices.

In some instances, getting a bargain on a home is great, but there are some reasons why many homeowners are concerned. Having property values remain steady is in the best interest of just about every homeowner out there. The equity in their homes is more than just money in their pockets. Equity buildup is important to many people who want to move into better neighborhoods, have money for retirement, or, if they have already borrowed the equity, they don't want to owe more on the home than it is worth.

Over the past two years, in cities and towns across the country, home prices have dropped substantially, in some cases, up to 50% or more. If property values drop too low, it will put more of a damper on the entire economy. As we have already seen, many people will simply walk away from their homes because they are no longer worth what they paid for them. When this happens, neighborhoods suffer from crime and vandalism because foreclosed homes are often left vacant for long periods of time.

About the author

John M. Roberts is the owner of John Roberts Realty located in Long Beach, California. You may contact him at jrobertsrealty@yahoo.com.

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