Mortgage Issues, Down Payment Woes Still Weigh on Housing Market It's no secret that now seems like a good time to buy a home: Affordability is high, interest rates are low and inventory is plentiful. More than 70% of homeowners and 59% of renters agree that the market is tempting. But those positive signals aren't translating into sales. The latest Hanley Wood Housing 360 Survey shows mortgage issues and down payments remain choke points for new buyers to enter the housing market, even as attitudes about home ownership remain strongly positive.

"The overcorrection in the mortgage market is a drag on the process," Kent Colton, senior fellow at the the Harvard University Joint Center for Housing Studies, said in a statement. " We've gone from one extreme to the other and it's stalling the housing market and therefore the economy." He presented the survey findings in a phone conference with reporters on Tuesday. The survey respondents included more than 3,000 homeowners and renters across the United States.

One in five U.S. homeowners remain underwater on their mortgages, the survey showed. That statistic underscores the prevailing feeling among 67% of homeowners that their current home is fine, and 40% of homeowners expressed no urgency to make a move within the housing market at this time. A quarter of existing home owners also said they needed a better paying job in order to consider buying a new home, the survey showed.

More than 50% of the renters polled said they simply cannot afford a down payment. Just behind down payment concerns on the list were a lack of motivation and a lack of confidence: 45% of renters said they did not feel any urgency to enter to market and 38% expressed concern that they may not qualify for a mortgage. More than half of renters said their job income needed to improve in order to enter the market, followed by lower down payment requirements and an improved credit score.

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The mortgage industry's tighter requirements for down payments may be in conflict with what people can afford: 65% of renters said that a 5% down payment or less was affordable, while that number was 36% for home owners.

In short term, the picture for the housing market remains "uncertain" through end of next year, said Colton, with little urgency from buyers and renters to make a move. He added that policy changes in the mortgage market could help motivate more buyers to enter the market. Over the longer term, Colton expressed optimism that the housing market would return to a sustainable equilibrium.

"We will continue to bounce on bottom, and at some point, people will realize it is a good time to buy and act on that, and we will see a bump up on sales," he said.

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July 16 2013 at 1:06 PM Report abuse rate up rate down Reply
Lazarko

Okay, to all those die-hard Democrats define "fundamental change?" Obama is a progressive ex-professor see any reason to fear liberalism gone wild? History is a great Gnome almost always something repeats! The name has changed but extreme views are just that. Government control is pure Socialism, why would any rational human being want that kind of control? America was founded as a Republic and for good reason. "We the People," not we the government is why America became great. Democrats say the "New-Deal," saved us from the Depression, "NO." FDR made the recession into a Depression due to his policies. Read your "History," Democrats your so-called savior dropped the new deal crap and pushed free market and yes democrats the evil word "CAPITALISM." Google-it tell me I'm wrong I'm all ears. Now, Obama's jobs bill; please!! Where was his so-called jobs thing when he had both houses and could pass anything put forward? So shut the hell up you hypocrites and America vote these Socialists out of office and return us citizens to a Republic that is for the people and by the people, AMEN!!!!!!!!!!!!!!!!!!!!!

October 05 2011 at 3:03 PM Report abuse rate up rate down Reply
mdunnjr

Wasn't it the low tono down payment mortgages that got into the mess we are in today? Low mortgage requirements = too much inventory--eventually.

You gotta love the story--too many renters are having a difficult time coming up with a down payment--I think that was the same argument used 25 years ago.

Do we ever learn?

October 05 2011 at 11:50 AM Report abuse +1 rate up rate down Reply
Greg

As a renter, many of us understand that our current positions could be eliminated or we could be subject to a transfer, etc., and that in the long run it is so much easier and cheaper to rent as we move about the country, simply trying to stay employed.

I do understand that many people have bought a house and then lost their job, but they should have had a backup plan to pay for that house should this occur. Many of us renters do understand that the same thing could happen to us, so we just don't want to buy and be in that position.

October 05 2011 at 10:19 AM Report abuse +1 rate up rate down Reply
donut999

Simple statistic--Currently, about 1/2 the sellers have to bring their checkbooks to closings versus a deposit slip. Of the 50% that walk away with a check, in many cases a pittance or small money. Back that in to the equation and it is simple to understand why the combo of bargain prices (this week, until they fall more) and dirt cheap mortgage money is not reviving sales. It is the biggest buyer's market in history, but there are very few buyers. They are stuck where they are, hopefully with breakeven equity, but most underwater. They cannot buy a house even if they have great credit and jobs because they cannot afford to pay off the existing mortgage, or the wherewithal for even a minimum down payment. And more good news--this time next year, the underwater folks will be a few fathoms deeper and the break even equity folks will go underwater.

October 05 2011 at 10:09 AM Report abuse +1 rate up rate down Reply
Frank

As long as unemployment and under-employment remain at these levels I wouldn't expect a housing recovery anytime soon. Compounding the problem is the number of homeowners underwater (immobile) as well as the stringent bank requirements. I'm not suggesting a return to the "no money down everyone qualifies" days, but the banks have become overly stringent in their rules.

October 05 2011 at 9:22 AM Report abuse +1 rate up rate down Reply
Sue

what "jobs bill". must have missed that one. Does anyone actually believe slimebama gives a flying f--k about anything other than himself?

October 05 2011 at 8:36 AM Report abuse +1 rate up rate down Reply
cookieman930

The reason that housing prices increased substantially from 1946-2006 was, simply, that the USA's construction industry could not possibly keep pace in building more and more houses for the USA's rapidly-growing population. However, since 2006 the USA population is not growing, and with the huge surge in new homes that have been built over the past 20 years, there is now clearly a complete "reversal of fortune" for the housing market.

The average US citizen has taken notice of this huge reversal, and realizes that a house that used to be a "guaranteed investment" in decades past is now, in 2011, much more likely to remain the same price, or even decline slightly in value, over the next 10 years. We all can "hope" or "wish" that home prices will increase, but we cannot deny the cold, hard reality of the laws of supply-and-demand.

October 04 2011 at 11:45 PM Report abuse +2 rate up rate down Reply
evd10

Many experts believe that prices haven't bottomed yet and if they have they won't be going up anytime soon, so there is no downside to waiting to buy. Buyers are motivated by a sense of ugency which is why the $8000. tax credit worked to sell a few houses. Those fools have probably already lost that $8000. or more.

October 04 2011 at 7:50 PM Report abuse +3 rate up rate down Reply
jeremy12

I for one would love to buy a house right now but with monthly rent being $1,090 getting the downpayment is a issue for me. Yes i can find cheaper area but i have a kid just about to start school and those areas that are cheaper are not areas i want him going to school, let alone park my car and motorcycle in overnight.

October 04 2011 at 7:26 PM Report abuse rate up rate down Reply