Compare Mortgage Rates For Free

The housing bust that put an unprecedented number of homeowners into foreclosure this year is turning out to be a boon for first time homebuyers. Lenders are experiencing an increase in bidding wars that make one think of the market’s American Dream period when almost anyone was approved for a home loan. Some experts are saying that this new trend may be the mark that the housing market crisis is beginning to recede.

California, Florida, Nevada, and Arizona that were four of the worst hit states lead this phenomenon where home prices once skyrocketed leaving the worst foreclosure crisis in decades. Now dominating the markets in vacant new homes, foreclosures, and other calamitous properties, are falling prices that grieve homeowners who are desperate to sell.

Between January and March one of every four home sales was a desperate sale to keep out of foreclosure. And that figure leaps to over fifty percent in the most distressed areas such as Detroit, Las Vegas, Los Angeles suburbs, and in new subdivisions where lax mortgage lending standards and speculation ran like a herd of deer under gunfire.

Bankers are seeing competing offers on homes that once sold for $350,000 three years ago and now going for $175,000.

“It’s not uncommon to have 10 to 20 offers on one house, and for the house to end up selling for more than its market price,” said Erin Attardi, a Sacramento Realtor. The strategy, she said, allows the bank to be selective, picking buyers with solid financing or those able to pay in cash.

In April, more than 660,000 properties were sent back to the lenders, which increased from 254,000 in April of 2007. A record three million homeowners was a month late on their mortgage payments in the first quarter, according to the Mortgage Bankers Association. Another 450,000 homeowners entered the last stage of foreclosure.

Now buyers are finding deep discounts on lender-owned homes, and that means the realization of a wonderful opportunity to buy that first home. But with the new boon in lower prices comes frustration. New buyers are finding that the competition can hamper their ability to making the best offer that the bank will accept.

“It’s actually stimulated the market,” said Janice Ziesig, owner of Z House Realty Group in Orlando, Fla. “Things are moving now — more so than they were.”