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What's to blame for dismal March home sales?

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Mortgage Professional America | 23 Apr 2014, 09:49 AM Agree 0
New single-family home sales took a tumble in March. What's to blame?
  • Raymond Oshman | | 23 Apr 2014, 10:13 AM Agree 0
    a perfect analysis; this is exactly what I sent to CNBC earlier this morning; been in this business for over 41 years
  • Brian | | 23 Apr 2014, 10:47 AM Agree 0
    I started in 1990 at the end of the last collapse where people lost 20% of the value of their homes. Average price at the time here in South Queens NY was about $100,000. Average loss was about $20K. Employment in the 90's allowed people to earn back their losses and interest rates continuously fell from 14% to 10% down to about 7.5 to 8%. This caused prices to more that double. the problem now is affordability is way down in the market. Prices are almost back to the 2007 levels and real incomes have declined since 2009. In addition to higher prices property taxes have doubled and utility costs have doubled. The largest pool of borrowers are middle class and the economy has devastated them. The ones that owned homes prior to the crash have damaged credit and the new young borrowers are having a difficult time saving for a down-payment and closing costs. The high end is doing well because they have invested assets which are being converted into real estate investments but the average middle class buyer is struggling to own. Between January 2013 and now prices have increased $60K and rates are up 1% shaving another $20K off of qualification. Then we have higher MIP FEEs, Higher insurance premiums because of hurricane Sandy, and higher property taxes of about $1000.00. It will be a slow summer.
  • RICHARD A DETHOMAS | | 23 Apr 2014, 11:42 AM Agree 0
    I have 30years in this industry and agree with most of above post ...however the # 1 problem is RIDICULOUS underwriting guides, even for the extreme high credit score borrowers. As a Real Estate broker as well as a Mortgage broker I speak with clients every day and am told the only reason they are not buying is that they are concerned that they want qualify for another house if theirs were to sell. Until that changes,we will remain stagnant at best.
  • Loan Officer in Ohio | | 23 Apr 2014, 11:51 AM Agree 0
    One thing severely restricting first-time buyers and in some extent move-up buyers is the heavy Student Loan burden many young people have. It's not unusual to see first-time buyers with student mortgage payments of $400 per month or more. Add that to the fact that many of those college grads have had to settle for a job making far less than they had hoped the degree would get them. FHA used to allow student mortgages deferred 12 months or more to not be counted. Now we must count that payment even if it doesn't start for a few years.
  • Terry S | | 23 Apr 2014, 12:23 PM Agree 0
    Higher rates, mortgage insurance and prices. The frenzied buyer of last year ie renters, investors and bottom feeders have all left the building. In Portland, OR that started happening last fall. Now I have underwater sellers that are patiently waiting to rebuild enough equity to squeak out the closings costs and move on. I am at 25% of my production of this time last year. This is typical of a recovery from a declining market and with 30+ years in the business, expected. I warned other agents not to spend the money from last year. We will be in this pick up-dead-pick up-dead market for a while.
  • Traci | | 23 Apr 2014, 12:25 PM Agree 0
    I am seeing the same thing in central Arkansas (rural area). Most of my clients are first time home buyers and with reduced DTIR numbers, higher taxes and much higher insurance, they don't qualify for anything decent or in safe neighborhoods. Now add sky rocketing groceries and many are afraid to buy. I haven't seen it this slow at this time of year for a long time. First it was the terrible winter and ice keeing folks home, then the worry over what their health insurance premiums would do because of Obamacare, and now high costs living. The outlook doesn't look promising for small shops to survive...reduced volume, caps on fees, tight guidelines = another tough storm to weather!!
  • Loan Officer in Ohio | | 23 Apr 2014, 01:40 PM Agree 0
    Actually, I think the small shops will weather this better. As a small Broker shop, I have very low rent and utilities. I have no other employees -- I process the mortgages myself.
    It will be the large outfits with massive rent and payroll expenses that are going to suffer.
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