Home Price Bargains For The Summer

Home prices are already one third off their highs, but this summer could bring the real discounts. Buyers are still cautious, and anxious sellers will have to price aggressively to get them off the fence.

Several factors appear to be leading to blow-out prices:

Accelerating price drops: Home prices have already reached their lowest level since the housing bubble burst, and are now at 2002 levels. Sellers will feel the pressure to make deals before their homes lose even more value.

Bloated inventory: There are tons of homes on the market, more than eight months worth at the current rate of sales. Many are distressed properties — short sales and bank repossessions. Such homes are selling at discounts up to 50%.

Tight credit: Some homebuyers still can’t obtain mortgages, limiting demand.

Unemployment: While the job picture has brightened in some parts of the country, unemployment is still around 9%. People without jobs don’t buy homes, obviously, but high unemployment also rattles working people. Lacking the confidence that their jobs are secure, they may not look to buy.

These forces could all come to a head as the traditional summer home buying season wears on because of the cyclical nature of homebuying. Buying normally takes off in spring as many young families hope to make their moves before the new school year, but this summer is looking altogether different in many parts of the country.