~ First Time Buyers Vs. Investors, Lenders, Appraisers ~
Rates may be historically low and prices finally affordable for first-time home buyers but a recent survey by Campbell/Inside Mortgage Financing shows that cash-carrying investor buyers are still having a huge impact in sales of residential real estate. The most current data compiled by the Campbell Housing Pulse Survey, for sales through December 2011, shows that cash buyers purchased a very significant number of homes in each month of 2011.
I'm a participant in this survey of 2500 agents around the country. It's clear to me that cash-waving investor buyers continue to drive down home values because they often offer as much as 10-15 percent less than those with financing. Sellers will go for cash primarily for two reasons. First, a buyer with financing might offer more but if the house doesn't appraise at that purchase price the loan won't be approved. The other reason is lenders are taking so long to approve loans that sellers, many of whom must sell, can't or won't wait to see whether the financing will come through.
What's the take-away? Lending policies and appraisal methods must change. These policies are continuing a downward spiral in property values. Not only are they hurting homeowners across the land---they are preventing wanna-be first-time buyers from realizing their dreams.
Don't get me wrong. Cash investor buyers have an important role to play in the housing recovery. They are purchasing a lot of the distressed properties available today. But lenders and appraisers must make it easier first-time buyers to take advantage of today's prices and rates because these are the homeowners who invest in more than just the houses they buy. They invest in the future stability and well-being of our nation's neighborhoods and communities.
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