Are you looking for a deal on a new home. The prevailing formula that home buyers and investors are looking for have a common characteristic. Is the home I am going to buy a good deal?

Motivated sellers are what driving the market.  And yes, banks who have REO property are considered motivated sellers. These are people that are willing to deal to sell the home, not those who are listing to see what happens or still expect 2006 prices. 

Lets face it, all these government programs sound great on the evening news, but realistic home prices sell homes.

I learned a great lesson in college by a professor of marketing. When you go into McDonald’s, you will not buy a $10 dollar hamburger. It is just not going to happen. Yet if you are in a fancy restaurant, you would be confused by a $2.49 quarter pound burger.

Perspective is everything. If you think you are being overcharged you pull back and if you feel you are getting something inferior you will also postpone the buying decision.

That is why capitalism works so well. If the markets had their way, we would have been out of this mess a while ago. Prices would have fallen drastically as the bubble burst and then buyers would have raced in to get the deals. It would have been a painful and quick experience.

Instead we are in a period of slow decline as buyers wait for the next big government program, price drop, or indicator that we have a bottom.

It is the death of a thousand cuts.

So what markets where motivated sellers are dominant. They will drive prices to the point that buyers will know they are getting a fair deal and have the potential to make a profit.

Top 10 Smart Markets To Purchase A home In For 2009

1. Las Vegas
2. Sacramento, Calif.
3. San Diego, Calif.
4. Los Angeles
5. Detroit
6. Phoenix
7. San Francisco
8. Washington, D.C.
9. San Jose
10. Atlanta

via Forbes

Update: Rob Blake does an excellent job explaining this while giving other alternatives in a post a BiggerPockets:

Maybe that is the best answer. Do nothing and let the real estate market absorb all the foreclose homes at depressed prices. This will eventually mean a bottom in home price gets hit or what economists call an “equilibrium”. The theory goes this will happen anyway and the only thing the Feds or lenders can do with too much “help” is slow down the inevitable. If that’s true, well-meaning “help” turns out to be “hindrance”. Not good…

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3. Bottom Of Real Estate Market Is Early 2009 According To Realtor Survey
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5. Internet Leads The Way For Real Estate Leads in 2009