Good afternoon Everyone!
I hope everybody is having a great weekend! I can imagine many potential homebuyers are probably thinking about sticking your toe in the water and seeing whats out there now that our country is littered with foreclosures.
Before you decide to do this take a look at the the number of Countrywide foreclosures that are available:
As you can see, we had a dropoff in April/May as the "early idiots" decided to jump in and gobble up foreclosures as soon as they became available.
I warned everyone back in March that this was a horrible idea. Most of these buyers bought these foreclosures at 15-30% discounts. The same homes in the bubble areas are probably down another 20-30% since then as the foreclosures continue to pile up.
I mean look at the huge jump on that chart in the last month as lending standards have tightened. The financial crisis has forced the banks to hoard cash and play defense. Bill Gates would probably have a tough time qualifying to buy right now.
Housing cycles are much different from any other normal business cycle. They take years to play out. It took 7 years for home prices to get back to even following the 1991 housing bust.
I expect it may take well over a decade for prices to recover from this cycle because the lending was much so much more irresponsible and full of fraud.
There is no rush to run out and buy a foreclosure right now. The more foreclosures that are out there, the cheaper prices will get because the banks will be more desperate to get rid of them.
You need to at least wait until the number of foreclosures have peaked before trying to negotiate with a bank on buying a foreclosure. I don't expect this peek anytime soon. The number of foreclosures should to continue to soar as we head into a deep recession and unemployment continues to rise.
Bottom line here is please be patient. Home prices won't be going up for years which gives you plenty of time to get a house at a great price. This is one of the biggest financial decisions you will ever make in your life.
Its better to be a little late here than too early. If you don't believe me, ask one of those suckers that bought a foreclosure back in April.
Buyers remorse is a terrible feeling.