No Houses Left for First Time Buyers

In the last few months we’ve seen a flurry of sales as first time buyers are trying to close on a home purchase before the $8000 tax credit expires on November 30th (maybe).

This has largely lead to the precipitous decline of available inventory on the under $190k and brought Months supply of homes in the 1st time buyer category down as much as 60%!

This has been seen expecially strong in the Lender Mediated category, and particularly in the Bank Owned segment:

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While it is quite possible that the tax credit is extended, the question becomes whether there will be houses out there for these buyers to purchase.  In the Under $120k segment there is less than 3 months of supply.  When considering that close to 1/2 of these properties listed for sale are likely already pending, the real supply at this price point is very tight – I have several clients hunting desperately for homes and are quite disappointed.  Some of these buyers may not be able to find a home even if the credit is extended.

Even in the $120k – $150k and $150k – $190k price points we’ve seen substantial reductions in available inventory and months supply and this has decreased the options for many buyers.  While there is still many homes to choose from, even this inventory is “picked over” by buyers, meaning it is either a bad floor plan, bad condition, bad location, badly overpriced, or a combination of all the above.  There are still many more foreclosures and short sales coming in the next year (as well as Traditional Sellers too) but the demand for these price points has been substantially stronger than new supply coming on for many months now and so I question whether the available inventory will climb much in 2010.

I have several clients that want to use the tax credit but have said they won’t settle just to get the money.  Good for them – that is definitely the right way to look at it!

If and when Congress passes an extension of the 1st time home buyer credit, buyers may still find themselves with nothing to buy.  I wonder how much Washington has thought about that?