Tags: Housing | Market | Spring | homes

Housing Market Might Lack a 'Spring' in Its Step

By    |   Friday, 06 April 2012 11:16 AM

The spring house-buying season is getting under way and real estate agents are hoping that the housing market will bloom along with flowers.

After all, mortgage rates remain low, and housing is more affordable than in years.

Unfortunately, a garden of weeds is more likely, writes a real estate expert for InvestorPlace.com.

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For one thing, lending standards remain tough, says Ethan Roberts, a stock and real estate investor. Despite low mortgage rates, many potential homebuyers lack the credit scores and incomes needed to qualify for loans.

Appraisers are low-balling valuations, sometimes apprising homes below the sales price. "Sellers cannot pay off their mortgage if they lower their price, and buyers are unwilling or don’t have extra cash to put down. So the deals fall apart," Roberts writes.

Lenders, who used to assume buyers would fix up homes after buying them, are increasingly requiring repairs to distressed homes before sales close. But neither buyers nor sellers, he says, want to complete repairs on a home that isn't guaranteed to sell.

And despite publicity about government helping the housing market, the Federal Housing Authority increased its mortgage insurance premiums, reducing how much homeowners can borrow.

Young people today don't see the benefits of buying a home, Roberts writes.

Many prefer to live in posh apartments and pay for the landlord's mortgage than buy their own home and have to mow their lawn.

Roberts says he sees no indication from real estate indexes that home sales or prices are improving.

But Trulia reports that asking prices on for-sale homes were 1.4 percent higher in March than one quarter ago. Prices increased month over month 0.9 percent in March and 0.6 percent in February. Because asking prices lead sales prices by two or more months, the figures point an emerging recovery in some markets, according to Trulia.

"Asking prices rose in February and March, but this doesn't mean that the bottom is forever behind us. The robo-signing settlement will accelerate the foreclosure process, pushing more homes onto the market and dragging down prices in areas that suffered most from the housing crash," says Jed Kolko, Trulia's chief economist.

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Friday, 06 April 2012 11:16 AM
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