Why Aren't Residential Property Sales Bouncing Back?

This year's April home sales were a bit discouraging. It's normal for people to start purchasing more real property when the temperature warms up in the springtime. Springtime and summer sales are also higher due to the fact that children are not in school during this time, so it is the best season for families with children to transfer to a new school district. This year, though, spring sales have been disappointing. Here are a few things that might explain what is taking place in the real estate market right now.

Some People Are No Longer In Need of a Home

Residential property sales were boosted by last year's tax credit for first-time homebuyers while it was being offered. But some of the people who purchased homes last spring to get the tax incentives would probably have been shopping for homes this spring if the tax credit had not been offered. A lot of people who were contemplating buying a new house in the near future escalated their plans to be able to claim the first-time homebuyer tax credit being offered by the government.

A Lot of People Would Be Required to Bring Cash to Closing in Order to Sell Their Houses

Plunging residential property prices put many property owners in a rather difficult situation. These property owners are essentially stuck in their homes because they can't afford to sell them. These people would be required to pay to sell their homes because they owe more on their home mortgages than what the house is likely to sell for. Because of this, they can't move, no matter how much they want to.

Mortgage Loans Are Tough to Get

The mortgage industry is to blame for much of the downturn in the number of residential property sales. You can't really fault them for tightening up their lending guidelines following the foreclosure crisis, but they do appear to be overdoing it. These days, you are not likely to get a mortgage loan unless you have very good credit. You may be required to come up with a big down payment as well.

Despite the fact that he had the money, one of Matt Farrell's buyers at Urban Real Estate of Chicago was unable to obtain financing in time to close on his new home. Because the mortgage company would not loan him the money, he ended up paying cash for the two million dollar house.

Low Appraisals Are Making Home Prices Decline Even Lower

Eleven percent of the member agents who were surveyed by the National Associated of Realtors reported that one or more of their deals had fallen through because the appraisal came in lower than the agreed-upon price. An additional 14% of the real estate agents who were surveyed said that a low appraisal had resulted in renegotiation of the selling price of a property.

People Who Can Afford to Pay Cash for Real Estate Are Still Buying

All-cash sales accounted for nearly a third of all residential property sales in April, in all likelihood because of fewer home mortgages being approved by mortgage lenders. Distressed properties and expensive luxury homes are selling since these market segments are not influenced that much by the shortage of available financing. Investors and people who purchase expensive homes often pay cash anyhow. It was only the average-priced homes that fell in sales volume in the month of April. Properties listed for under $100,000 or in excess of $500,000 increased in sales.

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