DEADLINENEWSROOM – It’s a no brainer.
We’ve said so all along and, apparently, our readers agree:
Millions of jobs and real, staunch economic growth – not easy-money from lenders, government support or even those “Facebook Factor” tech-industry IPOs – will give the housing market the boost it needs for the next boom.
In a two-month survey of website visitors, DeadlineNews.Com found that less unemployment and more economic growth are the keys to a solid nationwide housing recovery.
From Aug. 7 to Oct. 7 2012, using a Poll Daddy survey, DeadlineNews.Com gathered 139 responses to the multiple-choice question “What will it take for a more robust real estate recovery?”
Those who took the survey were allowed to select multiple answers.
The responses were:
• More jobs: 30.94 percent – It’s pretty simple. If you don’t have a job, mortgage lenders won’t give you a mortgage. As the unemployment rate shrinks, the housing recovery will strengthen.
The nation’s unemployment rate was 7.9 percent in October this year. That’s just about right were it was (7.8 percent) in January 2009J, when President Barack Obama was inaugurated as the nation’s first African-American president, burdened by Republican Party trickle-down, let-them-regulate-themselves economics that sent the nation into a financial tailspin.
Less than a year later, the unemployment rate peaked at 10 percent in October 2009 and has been on a downward trend since.
The connection between jobs and housing is clear – since the onset of the housing recovery, which John Burns Consulting put at January 2012, the rate has dropped nearly a half a percentage point from 8.3 percent in January to 7.9 percent in October.
During the same period existing home sales jumped 11 percent, according to the National Association of Realtors.
• A more robust economy: 23.74 percent – It’s not enough to have a job. While more jobs are tied to economic growth, not just any job will allow a household to afford a home. A more robust economy will not only create more jobs, but better paying jobs.
Right now, that isn’t happening. Personal income isn’t keep pace with the growth in home prices.
From the third quarter 2011 to the third quarter 2012, personal income grew about 3.5 percent, according to the Commerce Department’s Bureau of Economic Research.
• Relaxed underwriting: 17.27 percent – Lenders aren’t making it any tougher to land a mortgage, but they also aren’t making it any easier.
The Federal Reserve’s “October 2012 Senior Loan Officer Opinion Survey” said flatly, “Respondents reported little change in residential real estate lending standards on balance.”
The October survey found 92.2 percent of banks’ credit standards for approving mortgage applications “remained basically unchanged,” 3.1 percent tightened standards somewhat, and 4.7 percent eased standards somewhat.
That’s little changed from January when the survey found 94.3 percent of banks’ credit standards for approving mortgage applications “remained basically unchanged,” and 5.7 percent eased them somewhat.
While the DeadlineNews.Com survey found more looking to jobs and the economy as a boost to housing, Lawrence Yun, NAR chief economist, said there would be enormous benefits to both housing and the U.S. economy if mortgage lending conditions returned to “normal.”
That’s especially true after nearly of year of interest rates at or below 4 percent have had limited impact on the market.
“Sensible lending standards would permit 500,000 to 700,000 additional home sales in the coming year. The economic activity created through these additional home sales would add 250,000 to 350,000 jobs in related trades and services almost immediately, and without a cost impact,” Yun added.
• Fewer distressed properties: 15.83 percent – Fewer distressed properties on the market will remove some of the fear traditional sellers have had competing with lower-priced distressed properties. With more traditional sellers on the market, able to negotiate for a higher price, more home buyers will become aware the market has hit bottom, prices have no where to go but up and it’s a good time to buy.
Zillow reported last week home buyers in September were only getting a discount of 7.7 percent when buying a bank-owned property versus the same home in a non-distressed sale.
That’s well off the national discount peak of 23.7 percent on distressed properties in August 2009.
“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” said Zillow Chief Economist Dr. Stan Humphries.
“Additionally, in areas such as Phoenix and Las Vegas, where not long ago one out of every two homes sold was a foreclosure re-sale, buying a foreclosure is no longer just for investors,” Humphries added.
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