If this is a Buyer's Market, then where are the Buyers?

If this is a Buyer's Market, then where are the Buyers?

A Buyer's market is one that favors the Buyer. In normal times this means that there is more inventory than demand. The current abundance of very affordable homes for sale and the historically low interest rates would make this a buyer's market of colossal magnitude, but Buyer's are staying away when they should be crawling out of the woodwork to take advantage of the situation. In reality, sadly, this is a Buyer's market only because few have the ability to buy. Why is this happening?

•1. Lack of jobs. When people are afraid of losing their jobs or are working reduced hours, they are not thinking of buying a home. Obviously the already unemployed are not going to be buying homes. This is the number one issue.

•2. High lending standards. Financial institutions have swung from to loose lending standards to being overly strict. Denying mortgages has the consequence of reducing the pool of willing Buyers for their inventory of foreclosed homes.

•3. Lack of credit. This is not just relevant to the current recession. Most people are unaware of what actions negatively impact, or what actions improve their credit score. Managing your credit properly has lifetime benefits.

•4. Investors with cash. Short sales and foreclosures are approximately 30% of the homes for sale. Investors with cash can often get deep discounts because they offer a quick close. A Buyer that has to get a loan is often not a sure thing because of last minute financial, appraisal, and inspection issues.

•5. Condo issues. It is very difficult to get a loan on a condo if the Home Owner's Association has more that 15%of it's' owners behind on dues and it does not have enough reserves for future maintenance. Getting a loan when the owner-occupancy rate is below 75% is very difficult. Foreclosures and short sales in a complex magnify these issues and a Buyer needs lots of cash to make a purchase.

•6. Buyer confidence. Many people are sitting on the sidelines fearful to make a purchase because of all the negative housing news, primarily the threat of prices continuing to decline. Many Buyers are waiting for the market to hit the bottom before making a purchase, causing that day to be further extended into the future.

There is pent up demand for home ownership. Homeowners want to refinance to lower their monthly payments, freeing up money for other purchases. Financial institutions can help their own predicament by easing up on lending requirements. I also think that they should offer attractive financing or reduced closing costs to anyone who wants to purchase from their inventory. This would put them in the driver's seat for the whole transaction and increase their confidence that the deal will be done.