Consumers Want to Buy, but Waiting for the Right Time
A survey released this week by Hanley Wood shows that recovery is still evading the U.S. housing market. Consumers are in no hurry to buy a home even though they believe in homeownership as well as the significance of a healthy housing market in aiding economic recovery. “We thought people would be soured after watching home values fall, but instead we found the typical American still places high value on homeownership,” said Frank Anton, CEO of Hanley Wood in a release.
The media and data research company polled about 3,000 homeowners and renters in June and more than 68 percent of respondents believed that the time was right to buy a house. But, their belief and wishes were dampened by the realities of today’s economy, the survey found. Unemployment, strict lending practices and an uncertain future continue to take its toll on consumers. “As long as buyers are uncertain about what’s happening in the economy and where house prices are headed, they are going to be slow to move. There is no urging the market,” Kent Colton, a senior fellow at Harvard University’s Joint Center for Housing Studies told Reuters. There is a silver lining though. The survey found that 29 percent of renters and 19 percent of homeowners are considering buying a home in the next two years. Those numbers mean an upward of two million potential buyers are waiting for the right time to plunge into the market.
Now that could definitely be a game changer.
Home Prices May Not Climb Upward Soon
Without an aggressive and creative solution, home prices will not pick up and aid in economic recovery, according to new forecasts. Home values will continue to fall for years, says a poll conducted by the Professional Risk Managers’ International Association for research firm FICO. The poll conducted among industry experts found that bankers expect delinquencies on consumer loans to rise, underwriting to be stricter. They also expect the housing market to continue to struggle for a while. Forty-nine percent of the respondents said they don’t expect home prices to touch 2007 levels before 2020. Mortgage delinquencies will remain at a high for at least another five years, an overwhelming 73 percent of respondents said. The findings indicate that more needs to be done to aid the housing market toward a speedy recovery. Aggressive steps toward creating jobs is not a good enough catalyst for rejuvenating the housing market. Also, the never-before-seen low mortgage rates are good, but they are doing little to help the market when lenders are following strict lending guidelines.
Miami Magic Returns
Sellers are again smiling in the Miami market. Home sales in the city are up 50 percent so far this year, according to the Miami Association of Realtors®. “People were saying, ‘Oh look at all those empty buildings in Miami,’ Oliver Ruiz, managing broker at Fortune Realty and former residential president of the Miami Realtors’® Association told the Voice of America. “Well, all those empty buildings are now full.” Foreign buyers are responsible for the major turnaround. Miami has always been an attractive destination with its beaches, nightlife and fine dining. Buyers are pouring in from all over the world to have “a piece of the pie in Miami,” Ruiz said.
Cap on Mortgages Eligible for Federal Loans Reduced
As if falling prices and stricter lending were not enough blows, the housing market received another terrible punch when the cap on mortgages eligible for federal loans was lowered. According to The Real Deal, only loans of $625,500 or less would be eligible for lower down payments and interest rates as compared to the previous limit of $729,750. This rule, of course, applies to the country’s most expensive markets. The changes baffled experts who are wondering why the government decided to act on this when the market is already comatose. Certainly not good news for sellers and buyers, who are already struggling.
Homeownership Sees Biggest Drop Since Depression, Despite Second Largest Ownership Rates
Homeownership rates plummeted to 65.1 percent in 2010, according to new data released by the U.S. Census this week. That’s the second highest decennial rate, according to an Associated Press story. Tighter credit, unemployment rate and reduced government involvement could prevent the country from returning to its home ownership peak levels earlier in the decade, the story said. The trend is driven by more and more young adults moving in with their parents. Also, homeownership levels among middle-aged adults are at their lowest because of foreclosures or bankruptcy. Another significant find was that the homeownership gap between whites and blacks is at its widest since 1960, the AP story said.