The real estate market in Merced County, California is now a battleground between loan and cash-bearing buyers. And often, cash-bearing buyers ended up the winner.
Many buyers complained that after months of negotiating with lenders, they ended up losing the deal to investors who paid cash for foreclosed homes for sale, at a lesser amount than the original sale price.
Industry experts said the real estate market in the county is currently experiencing a low supply of homes. They speculate that banks have some hand on the dwindling number of homes for sale on the market. They said that banks hold off listing foreclosure properties in the hope that the lack of supply on the market would help boost offers of prospective buyers.
Experts said that despite discounted prices, many properties are sold at higher than their original asking price because of high demand and multiple offers from buyers.
However, industry experts said that the current situation would not last long because another wave of foreclosures is expected to swamp the market soon. They said that the coming foreclosures are brought about by the rising unemployment and resetting of adjustable rate mortgages.
But for the meantime, buyers have to contend to compete with each other for the limited number of foreclosure properties being sold on the market. Industry experts warned buyers that it will be a long and tedious process before they can call a home their own.
Currently, the county's real estate market has a little more than a month's supply of homes available for sale. Some industry experts blamed the foreclosure moratorium for the low supply. In November 2007, the county had a supply of homes for sale equivalent to 30 months.
Experts said that cash investors are flocking to the county market because the prices of properties are cheaper than what they would shell out if they build a new house. They added that typically, cash investors accounted for 5 percent of homebuyers in the county. But now, they make less than half of the market.
One question that bothers industry experts now is will there be enough buyers and investors to absorb the coming wave of foreclosures in the county?
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