...declining home prices and difficult lending standards are causing potential homebuyers to remain cautious about buying today.
Chicago, IL (PRWEB) June 11, 2011
Although interest rates are at record lows, the housing market continues to struggle. Economists have pinpointed four main reasons the U.S. housing market has not recovered according to RealtyPartner.com:
1) High unemployment – the unemployment rate, although decreasing, is averaging 9% and Americans are very much aware of their financial vulnerability... unemployment extension numbers skyrocketed;
2) Supply overhang – with an influx of homes for sale, the supply vastly outnumbers the demand;
3) Foreclosure crisis – people are losing their homes, bank foreclosures are facing legal scrutiny therefore delaying foreclosures for months and years and as a result the market is being flooded with homes that are abandoned and can not be sold;
4) Mortgage credit – banks have instituted tougher qualification requirements which has made it much more difficult for potential buyers to qualify for home loans.
According to RealtyPartner, U.S. real estate agents are reporting that there are more sellers in the market than buyers and a majority of the homes that are for sales are sitting on the market for at least 60 days and a significant number are sitting for at least 120 days. Agents are also reporting that homes are continuing to appreciate negatively making quite a few of the homes that are for sale, bank owned.
Overall, foreclosure increase, declining home prices and difficult lending standards are causing potential homebuyers to remain cautious about buying today. Mark Quinones, CEO of RealtyPartner, measures the current supply overhang in years — not months. During an interview with Bloomberg, Quinones said: “The reality which you add up all the houses for sale, houses vacant not yet on the market, houses underwater, seriously delinquent, in foreclosure, almost in foreclosure, the number is closer to 60 months, 5 years.”
The current housing market is still on the decline. Homeowners, who are underwater and waiting for a miraculous turnaround to restore their equity, will likely not see this happen at levels before the market crashed. It is a buyer’s market but currently, the negative factors outweigh the positive ones when it comes to buying a home in the current real estate market.
# # #