The poor buyer. Many of the more serious buyers are out there now, the ones that sat out the bubble years, and are dealing with REO's and foreclosures. These homes are selling 40-60% on the dollar. Sometimes even less. 

THAT DOES NOT MEAN THEY ARE A BARGAIN!!!

I can't emphasize that enough. If you are an investor, that home has to have positive cash flow for it to be an investment, vs a money pit. You can borrow roughly 100k for $600/month. If you are buying a $200,000 home you have to bring in MORE THAN $1200 a month as you have to pay property taxes and usually some form of HOA a month too. 

I was just out in Litchfield Park and Surprise and was into a number of foreclosures which despite the write down on the mortgage being an REO they still all required some significant work before they were rentable, from $500 to $30,000 of work. If you put down 20% on a 200k home, for a loan of 160k, your mortage would be running around $1000. Once you include $1800 in property taxes annually, thats a monthly cost of $1150. If you have an HOA on top of that (and most do), you are now looking at around $1300 and up just to cover your buckle. 

IF this house you buy is out in Surprise, your rental income is around $900 for a 1500 sq foot home. Its only worth $100-$150 more per month if its in Glendale or Peoria just off the 101.

Thats not enough to cover your buckle, and my above numbers didn't include a vacancy rate of 7% or take into account other contingencies. 

If you are working with a buyer investor, make sure you work through the numbers with your client diligently. Many homes are still not low enough for a positive cash flow in certain markets. That also probably means that home prices still have some room to drop. 

IF your buyer is a Canuck, or Minnesotan, just down here for R & R then the numbers are less important.

Marc