While the housing sector has paced an impressive recovery since summer 2012, America’s property market is still on unsteady ground. Underwater mortgage rates remain high throughout big cities, and buyer interest shows signs of flagging among first-time buyers. Thematically speaking, high-demand metros throughout the West Coast are witnessing price gains that threaten to elbow out a bulwark of young buyers. While conditions are unevenly improving, certain greater obstacles remain.
As a new story from AOL Real Estate points out, the challenges facing the housing market are quite broad. Comprehensively speaking, the biggest hang-ups seem to be aforementioned rates of underwater mortgage combined with ongoing difficulties with credit restrictions and lending practices. The housing bubble was propelled in part by irresponsible lending practices, and the lasting whiplash has been extreme hesitancy on the part of America’s lending industry to provide loans. Or, failing that, provide loans with exceptional stipulations and heavy down payments.
On the brighter side, home sales hit their highest rate since the crash in June of this year. As the AOL Real Estate article notes, home prices in America’s twenty largest cities were up 12.1% in June 2013 from a year earlier. A projection from the National Association of Realtors predicts that home sales could rise to a full 5.1 million by the close of 2013, a sharp increase from the 4.2 million recorded at the close of 2010.
However, new construction lags notably behind both current demand and projected demand for homes. The discrepancy between the two is an especially powerful motivator for rapid ascension in home prices, a trajectory that might be so extreme that it precludes otherwise interested buyers from closing on a home. As I noted in a prior post, 20 and 30-something homebuyers are both the most crucial home buying demographic as well …read more