Today’s monthly survey of real estate agents shows that economic worries are still having an impact on buyer traffic and sales. Agents highlighted the consistent worries
among buyers about a) job security, b) expectation of declining home prices, c) difficult
financing, and d) high gas prices, which provide buyers with the excuse to stay home. High inventory and buyer hesitation is keeping pressure on prices.
Buyers stick to the sidelines. Buyer traffic dipped lower in June, as our traffic index fell to 21 in June from 33 in May, with readings below 50 pointing to traffic missing agents’ expectations. This marks the region’s lowest reading since November. According to agents, buyers are nervous about the economy and the stability of the housing market; commentary was largely centered on a general lack of confidence in any type of recovery. Job security was a key issue for buyers, as several agents highlighted that a lack of jobs and high unemployment were major factors in buyers’ decision making.
Another agent noted that she has “More willing renters than buyers.” Your Guide found this interesting as I just read over the weekend the more rigorous lending guidelines; even for FHA loans. With buyers’ credit scores needing to be between 700 and 725 to even be considered “marginal” and above 725 to be considered “good” it seems that the number of borrowers that might even be eligible to borrow has shrunk by 50% or more during the mortgage crisis of the last two years. Buyers with credit scores just below 700 faced the possibility of paying an extra 1.5% premium on their interest rate just for the privilege – if they can get approved at all.
Buyers are exhausted and sick of hearing the recovery is around the corner.
It doesn’t sound like we’re out of the woods yet.