Tightening of Credit “Shuts Many Home Buyers Out”

The majority of renters — 73 percent — who live in single-family homes say that the challenges of getting a home mortgage is one of the main culprits keeping them from home ownership. About 33 percent point to their credit history as posing the biggest challenge in qualifying for a mortgage, while others are concerned about the tightening of credit that make it too difficult to qualify in general, according to the latest Fannie Mae National Housing Survey. 

Concerns about obtaining financing and growing concerns over the economy continue to plague the housing market, the survey finds.

“Consumers are more cautious due to concerns over employment and household finances,” says Doug Duncan, chief economist of Fannie Mae. “As a result, consumer spending, which accounts for about 70 percent of the economy, ground to a halt in the second quarter. Consumers are more hesitant to take on additional financial commitments, and a setback to confidence means a setback to the recovery of the housing market.”

Renters, however, seem to be getting the message that home ownership still makes more financial sense. Only 23 percent of renters living in single family homes said that renting makes more sense than buying a home.

But besides the tightening of credit, concerns over employment is also keeping many out of the market. “Dissatisfaction about the direction of the economy and related employment fears are damping demand to buy homes and slowing the recovery,” Duncan says. “People who believe owning is a better deal than renting are nonetheless planning to rent, at least until things improve.”

More information at source: “Credit Concerns Keep Renters From Buying,” RISMedia 8/16/11

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com