New government reports for January are showing that the number of home sales is up slightly while values are slightly lower. Banks are still very tight with their money and will continue to be as long as year over year home values are dropping.
So, who is buying homes in a market of no credit? The answer is that investors have started to step up and buy deeply discounted homes for all cash. Recent sales figures show that they now account for almost 25 percent of all sales.
What do these investors do with a home they just bought at a deep discount? Some of them will fix them up and try to sell them for a short term profit, but most investors will fix the homes cosmetically and then rent them out. Since they paid all cash for the homes they do not have mortgages to cover and hopefully , soon they will have an appreciating asset on their books. This is a gamble that more and more are willing to take.
Unfortunately, as these investors buy more and more homes and turn them into rentals, they actually degrade the overall values in those neighborhoods that have a high percentage of rental homes as compared to owner occupied homes. If you drive around most any neighborhood it is not hard to see which people have a pride of home ownership and which people really don't give a crap how the home looks because its not theirs. A neighborhood with more of the latter type will lose value overall.
So, the trend will continue for awhile with slightly more and more sales but a large percentage of them going to investors who will turn them into rentals thus keeping a cap on any possible upswing in home values for the foreseeable future.
Sorry, there is no good news in the housing markets yet, even higher sales of this type are not really a good thing.
