We all need to remember that people make up markets. Markets are not made by people in cigar smoke filled rooms, but actual people buying and selling homes. The actions they take affect the way investors set guidelines for lending money. In the 90s and early 2000s the guidelines were very loose and getting money was easy. Since late 2006 it has gotten harder and harder to qualify for financing. This was mostly due to the borrowers qualifications, not the housing market. That has all changed.

As part of the approval process, the market the home being purchased in is more of a factor than it has been. So not only is the investor concerned with the condition of the home you are buying or selling but also how quickly the other homes in that price range are selling.

So your probably saying no big deal as long as everyone is trying to buy and sell for their best interest the market will take care of itself, and in most cases you would be right. But now with the tightening standards you are at the mercy of those sellers that are testing the market or listing higher for a few months to see if they can get what they want not what the market bears. I recently had a home that was only on the market for 12 days before my client put it under contract but the homes that were most comparable were on the market over 6 months. Not because they were bad homes, just that they were over priced for the market.  The sellers were either too greedy or were not getting good advice from a real estate professional. This required my client to bring 5% more down because the investors (Fannie Mae and Freddie Mac) deemed the market soft. My client did not have the extra 5% to put down. We did through an extremely lengthy processes get the financing for my client but that may not happen the next time.

If you are selling you home please use the services of a realtor to make sure you are getting the advice of a professional that knows this changing market. Also be aware that now more than ever, markets in credit and well as housing make a huge difference in buying and selling homes.