By now you've read the market update in part 1 so we'd like to change it up again and profile a second buyer. Same exact criteria, only they have a maximum budget of $300,000 for the same area. This is a very typical buyer today and one that we run across everyday. Often times, they will be looking at getting an FHA loan which will further reduce the available inventory open to them. When we run this buyers criteria (not counting FHA limitations) according to the following criteria:
1000+ sqft living space
5,000 sqft lot
2+ car garage
max price $300,000
here is what we get:
(3) Buena Park
(2) Garden Grove
(1) La Habra
(25) Santa Ana
That's right, only 54 homes in all of Orange County that fit this!!!!!
Now if you start factoring in area, neighborhood, home condition, floorplan, and loan type it becomes quite obvious why MOST Orange County home buyers are frustrated with the process.
Still Not Convinced?
Here's another angle that really helps to put it in perspective. Right now, in most of these cities we are working with more buyers than there are homes for sale that fit the criteria!! That's right, just us alone! Now take into account all the other agents and the buyers they represent and the picture starts to become crystal clear as to why we are having bidding wars in the middle of a recession!
2 Possible Solutions For First Time BuyersOk, we are not trying to be negative here, we want to work towards a solution. Here is what needs to happen. Buyers with similar criteria need to loosen them by dropping city/bed/bath/sq ft/etc requirements or put the home search on hold. They may never get a house that fits their criteria and their current price threshold but this doesn't mean they'll never own a house.
In the meantime, most of them need to be saving some money for a downpayment (hopefully 20%+) to reduce the potential mortgage payment and increase their price threshold. If the market happens to drop later, we'll, they'll be in an even better position! Either way, they're working towards a position of increased buying power by having more downpayment in the current maket, or working their way up into a less competitive price point with more bang-for-your-buck options available.
The tough part of this is that they'll have to come to terms with not owning a home in the near future. Again, many others will still feel it is their time to buy and for them it will take the simple, but often painful, process of reassessing wants vs. needs and ultimately coming to some sort of compromise.
If you want to reasses your wants and needs, you can search through the homes for sale in Orange County to see if there are any new areas that you may be able to consider.