Requirements for Borrowers
If you’ve been wondering what kind of effects the gloomy economic news will have on the housing market, read on. After the initial debt ceiling mess and the drop in job market, the Fiserv Index was expecting that any signs of a recovery in the housing market would be pushed back about 3 months. Now, they’re predicting that the prices won’t start to turn around again until the second quarter of 2012. According to CNNMoney, “Fiserv expects median home prices to continue to fall by an average of 3.1% between March 31 of this year and March 31, 2012. After that, it expects to see prices increase by 2.7% until the first quarter of 2013”.
Conditions in housing sales seem to be a direct reflection of household confidence in the economy, and most Americans aren’t feeling too confident in their country’s economic conditions, at current. As a result, housing prices will continue to plummet. While this is good news for buyers, lenders will continue to put more restraints on borrowers, thus a vicious cycle.
Another continuing cycle: while home prices continue to fall, inventory is escalating. “At the latest rate of sales, it would take 9.5 months to exhaust [the current] inventory, about 50% longer than what NAR considers a healthy housing market”.
On the bight side, Lawrence Yun chief economist of NAR notes “with home prices in a broad trough and historically low mortgage interest rates, high housing affordability conditions and rising rents could stimulate a more rapid sales recovery if banks get back into the business of lending to more creditworthy borrowers”.
This raises an important question: after experiencing the backlash from irresponsible lending, should lenders ease up on potential buyers? And what do you think should be required of a borrower? Whether your thoughts are simple or specific, join the discussion in the comments section below.
Courtesy of CNNMoney and The National Association of Realtors
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