Residential Real Estate Market Recovery Continues to be Impacted by Uneven Job Recovery, Restrictive Home Mortgage Underwriting Standards

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Housing market update by Ron Peltier, Chairman and CEO of HomeServices of America, Inc., the second-largest homeownership service provider in the U.S. and an affiliate of Berkshire Hathaway Inc.

“Our nation’s residential real estate market recovery continues to be impacted by a number of key factors, among them an uneven job recovery market, as well as restrictive home mortgage underwriting standards which are keeping many viable buyers from securing financing,” said Ron Peltier, Chairman and CEO of HomeServices of America, Inc. TM, a Berkshire Hathaway affiliate, in a statement to the company’s more than 15,000 sales associates.

Soon after the National Association of Realtors’ (NAR) announcement of a 12.9% decrease in sales over the same period in 2010, Peltier noted that “the 12.9% decrease is not as drastic a reduction as it seems because sales surged in March and April of 2010, due largely in part to the home buyer tax credit. The incentives created an intense, but artificial market which was unsustainable. It’s an apples-and-oranges comparison.” The Labor Department also revealed a rise in the four-week moving average of new jobless claims despite the fact that new claims fell more than expected the previous week -- further confirming that job recovery will be uneven. “It’s a roller coaster, both for the job market and, consequently, for real estate,” he added.

“Another factor impacting the market is restrictive loan underwriting,” continued Peltier. “While we certainly want to encourage and ensure that our buyers are fully qualified and capable of sustaining their commitments, financial institutions are applying standards that are discouraging qualified applicants.”

“This is unfortunate because while we still have generationally low rates -- with the national average rate for a conventional fixed-rate mortgage tracking at 4.83% in April, 2011, according to Freddie Mac -- to many purchasers, financing appears to be very complicated.“

“The value in the marketplace is fueling a new generation of investors,” he continued, “These are prudent individuals and organizations that recognize the exceptional value in today’s market.” Looking toward the future, Peltier believes the market will have its ebbs and flows throughout the remainder of 2011 before reaching a more tenable stabilization in 2012.

“There is no quick-fix,” he added, “but we are clearly headed in the right direction. We believe that 5+ million existing home sales is an appropriate and sustainable range, so the fact that we have achieved that volume of sales without any artificial incentives is a positive step. As unemployment eases and the foreclosures and short-sales work their way through the sales process, pricing will increasingly stabilize, which will in turn fuel sales.”

“We believe that for those individuals who have the capability to purchase a home today, the value is unprecedented,” he concluded. “We are definitely living through the buyer’s market of a generation. Purchasers should check with their HomeServices Lending loan officers to better understand their ability to qualify for financing.”

About HomeServices of America
HomeServices of America, Inc., based in Minneapolis, Minn., is the second-largest homeownership service provider in the U.S. Owned by MidAmerican Energy Holdings Company, a consolidated subsidiary of Berkshire Hathaway Inc.,HomeServices’ operating companies offer integrated real estate services, including brokerage services, mortgage originations, title and closing services, property and casualty insurance, home warranties and other homeownership services. HomeServices Relocation, LLC is the full-service relocation arm of HomeServices of America, which provides every aspect of domestic and international relocation to corporations around the world. HomeServices operates in 20 states under the following residential real estate brand names: Carol Jones REALTORS; CBSHOME Real Estate; Champion Realty Inc.; Edina Realty; EWM REALTORS; Harry Norman, REALTORS; HOME Real Estate; Huff Realty; Iowa Realty; Koenig & Strey Real Living; Long Companies; Prudential California Realty; Prudential Carolinas Realty; Prudential First Realty; Prudential York Simpson Underwood Realty; Prudential Yost & Little; RealtySouth; Rector-Hayden REALTORS; Reece & Nichols; Roberts Brothers Inc.; Semonin REALTORS and Woods Bros. Realty. Information about HomeServices and the locations of its subsidiary companies is available at http://www.homeservices.com.

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Caroline Underwood
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