First-time Buyers Are Being Pushed Out of the Market

More and more first-time buyers are being pushed out of the housing market. Large REIT‘s and cash flush investors are snapping up what little inventory exists in the entry-level market. This trend is especially true in Southern California where some areas are reporting only 1 month or less of entry-level inventory. The inventory for the entry-level market is 40% lower this year over last.

The Los Angeles Times reported that Wall Street is viewing rental income property as the new high risk securities market. Wall Street investors are spending close to market prices to obtain the few foreclosure properties currently available. These investors are building portfolios of rental properties using cash as their leverage point. Flippers are being left behind as they can’t pay market prices for homes that need substantial repairs and first-time buyers who must finance their homes can’t compete with all cash buyers.

The reduction in available inventory is a result of existing home owners either deciding to keep their homes rather than jump into a crowded buying pool, or home owners who have lost all their equity in the housing crash and can’t sell their homes without having to add cash to the deal.

This trend in reduced inventories is expected to last for quite a while. This will push buyers either out of the market in frustration to into new construction homes. The number of permits and construction starts for new homes has been increasing for the last several months. Sales of new homes has been continuing to climb over the last 3 months in San Diego and other Southern California communities.

First-time buyers are going to have to discover more creative ways to attract sellers’ attention. Things like personal letters about the buyers, family photos and extra financial documents to prove creditworthiness are all becoming more popular for first-time buyers.

About catherinetalksrealestate

I am a San Diego native who loves everything about San Diego. I enjoy camping, hiking and reading. I am a licensed real estate agent in San Diego working with Coldwell Banker.
This entry was posted in Buying a San Diego Home, Investing in a San Diego Home, San Diego Real Estate and tagged , , , , , , , . Bookmark the permalink.

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