18 Feb 08 
New Homes in California – A New Dilemma for Home Buyers
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Years ago home buyers and investors were rushing at an opportunity to buy a new home; the high demand increased home prices and made it so many homes were not affordable for some families. Today, the downturn in the California real estate market is making new homes affordable once again. Unfortunately, even though homes are affordable, the rise in recent foreclosures has made owning a new home just a dream. The dilemma is that buyers are unable to qualify for a home loan because they don’t have a large enough down payment or their credit rating is sub-par; two things that would have been overlooked by lenders just two years ago.
During the recent boom, professionals throughout the real estate industry scrambled to capitalize on the huge monetary gains that the real estate market delivered. Experts and the media have pointed out that many of the problems we face today could have been avoided by maintaining responsible standards by all real estate professionals. It’s hard to fault an industry or person; much that was done was only done to meet the needs of home buyers and a robust industry. Some argue that home builders built too many homes, and investors created an unrealistic demand but the blunt of the blame has been placed on lenders and their loose lending practices.
The rise in foreclosures have left many lenders with homes and the responsibility of maintaining and reselling them. Most are losing millions and all are tightening their loan qualifications. Today, home buyers wanting to buy homes are faced with better home pricing, a greater selection and low interest rates but many of them can’t qualify for a home loan in light of the tougher requirements from lenders. Many potential California home buyers interested in buying a home are having problems qualifying or coming up with a larger down payment. These home buyers are the recipients of tough lending qualifications arising after a real estate boom in which creative lending practices and a lack of financial education have left many homeowners facing foreclosure. Now many of these creative loan packages don’t exist; lenders are leery of sub-prime loans and lending to buyers with little money to put down on their investment.
It’s unfortunate that many would-be homeowners can now afford the monthly payment on their home loan but cannot get qualified for a mortgage. This is just one more obstacle that inhibits the California real estate market from rebounding and nullifies the affordability of homes in California.
Tags: california homes, California Real Estate, home buyers, homebuilders, lending practices, new homes in california for sale, real estate investing
