Buying opportunities, for those looking for bargain deals, are still good and should extend well into 2010 and 2011. Housing starts according to the Commerce Dept. have come in lower than expected for 2009.

One would naturally think, as home builders attempt to reduce inventory, that home prices would stabilize. To a certain extent they have stabilized albeit temporary.

First time home buyers who have been sitting on fences, automobiles and motorbikes are now out in force trying to take advantage of the $8,000 tax credit set forth by the U.S. government. Ironically, the tax credit is due to expire on November 30'th. This small flood of home buyers has temporarily created a high demand in low to middle income housing which in turn has created more competition among investors seeking cheap deals on foreclosures and HUD homes.

HUD homes have almost been untouchable to investors since first time homebuyers get first dibs on bidding. And, even when a HUD home goes unsold to an owner/occupant the blind bidding process makes it hard to land a good HUD deal as it is hard to know what to use for a "highest and best" offer.

But this upswing in home buying by owner/occupiers, I believe, is only temporary as the spike in first time home buyers dies away as the tax credit ceases. In parallel home builders have been trying to decrease inventories which has also helped to temporarily stabilize home prices. But in contrast, builders are still building far too many homes for the market demand to absorb. They just can't help themselves from doing what they know how.

An annual pace of roughly 600,000 new homes according to the Commerce Dept. will be available in a nine-month time frame thus filling a pipeline into the future which will lead to a constant stream of new homes. However, most recent data shows that the coming annual market demand for new homes is less than 450,000. As one can see supply will most likely outpace demand into the next year.

As if there isn't enough negative housing news, foreclosures according to RealyTrac will total near 3 million in the next coming year. Mortgage resets will also add to the mix forcing many homeowners to try and sell since re-financing is much more difficult than it was 4 years ago. Many of these loans contain option ARMs most of which are no-doc loans. As these come due next year homeowners who couldn't qualify for traditional mortgages will be forced into foreclosure.

Prices will most probably decline next year and today's potential buyers may hold out even longer before they enter the market. Look for the $8,000 tax credit to be extended as the government tries to counteract the negativity of the market in the coming months.

We still have a long way to go before the housing market stabilizes and in the mean time there will be ample opportunities to buy foreclosed/distressed properties well into 2010 and 2011.