Buyer's Market... or just plain crazy?

What could be better for new home buyers and investors than low home prices and mortgage rates? Not much! It seems like the perfect combination, and I'm working with several first time home buyers wanting to take advantage of the current environment.

One of the first questions they have is... "when should we schedule our move-out date?" Answering that question shows that the buyer's market we are currently in is not what most of us consider a buyer's market.

Inventory

First of all, let's look at the inventory situation for single family detached homes in Placer County. There are just over 2000 homes in the MetroList system in Mid-February for the county. However, that's a little misleading as 1112 of these homes have been sitting on the market for 90 days or more. Only 1/3 of the homes sold in the past 90 days were on the market more than 3 months. In other words, if a home is priced correctly it should sell in 30 to 90 days. When you factor in the 'sitting homes' we are looking at a 4 month supply of homes under $300,000 and a 7 ½ month supply for homes over $300,000.

Competition

The second factor is the number of individuals looking for homes.
For value priced properties that first time home buyers pursue, they compete with investors who are also aggressively purchasing properties in the same price range.

Results

What does this mean, bottom line? Most often buyers are competing with others when they submit an offer. For bank owned and short sale properties this means that you had better be pretty much on the mark when you submit your offer. And even at that, you may get beat by another who has offered more cash, better terms, or simply submitted a higher offer.

However, does this mean you should give up and not try? Of course not! Here are some tips to follow:

• 
  Have your expectations set that you are in a competitive environment and you may not get that first home you fall in love with.
• Be flexible with your requirements so you don't pass up good values.
• Be prepared to submit offers on several homes and broaden your searches to include areas or types of homes that may not be your 1st choice but will fulfill a majority of your requirements.
• Talk to your Realtor to see how you can offset restricting requirements such as low down payment or special terms required.
• Keep saving money during the search process so you can add to your down payment or cover closing costs without financing.
• If your handy, consider fixing up a home; possibly delaying some improvements until you have the cash to do so.
• Most importantly is to keep having fun and don't give up.