U.S. home prices rise 0.3 percent in July

U.S. home prices rose slightly in July from a month earlier, according to a government index, further evidence the housing market is stabilizing. Lets hope it continues. Crystal ball anyone?

Real Estate Finance Update

The proportion of first-time buyers was high compared to levels seen in the past few years, but whether the concentration of first-time buyers in the current cycle can be maintained depends in part on underwriting standards. The ability of first timers to capitalize on lower home prices has been hampered by tighter lending standards, which heighten the difficulty for a typical first-time buying household to qualify for a loan.

Level of Difficulty in Obtaining Financing

Tighter underwriting standards led to more scrutiny in the process of mortgage application approval. Home buyers experienced a high level of difficulty in obtaining financing for the homes they bought. On a scale of “1” to “10”, with “1” being “very easy” to obtain financing and “10” being “very difficult”, home buyers on average had a level of difficulty in obtaining finance of 8.1. Twenty-seven percent of all buyers responded with a “10”, and 31 percent responded with a “9”. Only 13 percent responded with a “5” or below.

• Home buyers who bought an REO or a bank-owned property experienced the highest level of difficulty in obtaining financing. They rated the level of difficulty an 8.9, compared to a 7.7 for home buyers with a regular market sales, and a 7.6 for short sale home buyers.
• Repeat buyers reported the average rate of difficulty at 8.3, as compared to 7.9 for first-time buyers.

Home Buyer Tax Credit