Buyers vs Investors
With the deflation of the real estate “bubble,” the collapse of major financial institutions, and bad mortgage lending policies and processes, we’re in the midst of the perfect economic storm. The problem is that the storm isn’t close to being over yet. The oldest of baby boomers (people born in the United States between 1946 -1964) are starting to retire. Many boomers own more than one home. As boomers leave the workforce and want to downsize and divest themselves of some of their properties, and as they die and pass along those homes to children who already have houses of their own, the trend will be an increase in the total available inventory. While we are now in the beginning stages, it will progressively unfold over the next 10 to 20 years.
In many markets, we already have a glut of housing inventory due to the mass foreclosures that have happened in recent years. This is not good. Too much supply and not enough demand is a recipe for further drops in prices. And declines in housing values will make many properties good investment properties.
According to real estate agents, would-be home buyers are being overlooked by sellers in favor of all-cash bidders — even when the cash deal is lower than what is being offered by buyers who are being financed. Sellers tend to prefer cash because loan-backed offers have a longer closing time due to required appraisals and home inspections, as many banks will not fund a mortgage if a house has safety issues or is in a significant state of disrepair.
Usually, the all-cash buyers are out there looking for a flip. They’re going to use all cash to buy it, fix it up, turn it around, and sell it. Though the trend is helping to curtail the surplus of foreclosure properties on the market, investors are buying up the lower-end dwellings that move-up and first-time buyers want to purchase.
Call Tammy Mitchell Hines & Company for all your real estate needs.
618-281-HOME (4663) or 618-939-HOME (4663)