…could tighter lending guidelines put a damper on the housing market recovery?
The San Diego Daily Transcript reported in an article on CoreLogic’s recent housing report. The report said that housing prices in the U.S. rose 5% in September compared to last year. This is the largest year-over-year increase since July 2006. While prices were down 0.3% from August to September, this measure was not seasonally adjusted and is less than a small blip in the overall scheme of things.
Another article, which detailed the report’s findings for San Diego County, said that prices including distressed sales were up 2% in September compared to last year and up 1% compared to August. Not including distressed sales, prices were up 5.4% compared to last year and 1.1% compared to August.
As home prices continue to rise, would-be home sellers may come into the marketplace. This will help the issue we have regarding our extremely low inventory.
Two new rules set to take effect in January 2013 could put a damper on things. A recent article in the San Diego Daily Transcript reported that regulators are preparing to release two rules that could make acquiring a home loan even tougher than it is today. The first would guide lenders to make only the very safest home loans, thus reducing the number of people who would be eligible to obtain a loan. The second would require lenders to retain a portion of the loan for the riskiest types of loans made.
Most experts believe that today’s standards are already too tough. If and when these rules go into effect, it will further restrict loan activity in the marketplace. If fewer people can qualify for a home loan, either prices or interest rates – or both – will have to fall. It is hard to believe that rates can come down any more, so the next choice is for home prices to come down. We will have to monitor sales activity and home prices in the first quarter of 2013 to see if these new rules do affect sales and prices.
Bryan & Allison Devore
Prudential California Realty
North San Diego County and Carlsbad Real Estate