Housing
Market
continued from page 5
Where Are the Sellers?
Good question. It’s slim
pickings for a lot of would-
be buyers. That brutal
winter we just got through
prevented many East Coast-
ers from listing their homes
in recent months. About five
months’ worth of homes are
on the market, compared
with 5.9 months in 2012 and
8.3 months in 2011.
Housing supply previous-
ly fell toward the 5-month
level during the height of
the boom in 2006, when
buyers snapped up homes
faster than they could be
added.
This time, fewer homes
are being listed because 19
percent of owners are
underwater on their mort-
gages — meaning the sales
price wouldn’t be enough to
repay
their
loan.
Still, warmer weather, job
growth and a strengthening
economy are expected to
encourage more listings this
spring.
About 60 percent of
Redfin buyers faced bidding
wars in February, down
from 73 percent at this time
last year.
When few sellers emerged
last year, prices for the lim-
ited number of homes
available surged. Would-be
buyers, facing a shortage of
homes and locked in com-
petition with one another,
raised
their
offers.
Prices climbed in locales
such as San Francisco,
where a ton of money is
chasing few properties and
there’s not enough construc-
tion. Bay Area homes have
surged 23 percent, on aver-
age, the past 12 months,
according to the S&P Case-
Shiller index. That was
faster than any other major
metro area except Las
Vegas, where much of the
housing stock was rebound-
ing from the depths of the
recession.
But around the country,
many homeowners are still
reluctant to sell because
they would likely lose
money on the deal. The
2007 housing bust still
haunts
the
market.
About 19 percent of home-
owners owe more on their
mortgages than their prop-
erties would sell for,
according to the online real
estate database Zillow (Z).
An additional 37 percent are
“effectively underwater”:
Their sale profit would be
too low to cover the cost of
listing their home and put-
ting a down payment on a
new property.
Much of that shortfall can
be summed up simply: Too
few first-time buyers. They
bought about 1.5 million
homes last year, about
500,000 fewer on average
than they would have typi-
cally.
You might have thought
the economic meltdown
would have shut off home
loans to people with mid-
dling-to-weak credit. Yet
something close to sub-
prime borrowing has just
started a comeback.
Wells Fargo is now offer-
ing mortgages to subprime
borrowers with credit scores
as low as 600, down from
640. (The median credit
score for 30-year fixed
mortgages had been around
730.) And non-bank lenders
such as Carrington Mort-
gage Services are moving
into that territory. Carring-
ton has dropped its mini-
mum credit score to 550.
borrowers they once reject-
ed in part because they’re
When few sellers emerged last
year, prices for the limited
number of homes available
surged
It’s a sign that lenders are
becoming less tight-fisted
after restricting credit in the
wake of the financial crisis.
Lenders are accepting
hungry for more business
after mortgage refinancing
plunged in the past year as
interest rates rose. The aver-
age 30-year fixed mortgage
rate has risen about a per-
centage point to 4.4 percent
from near-historic lows in
May. A subprime borrower
with a credit score of 550
would pay 7.15 percent,
according to Carrington’s
rate sheet.
Investors bought roughly
one in every five homes
sold last year, according to
the National Association of
Realtors. Most of them
made all-cash offers and
ignited bidding wars that
other would-be homeown-
ers lost. The investors’
properties became rehab
projects or rentals.
But the 2013 price jump
should cause investors to
play a lesser role this year.
Areas that suffered the most
during the recession’s hous-
ing bust, including Phoenix,
Las Vegas and Tampa, have
seen prices rise. They’re no
longer the bargains that
investors considered them
to be a year ago, said Zil-
low’s chief economist Stan
Humphries. The result is
that bidding wars won’t
likely be as fierce in 2014.
April 23, 2014 The Portland and Seattle Skanner Page 7