According the to the National Association of REALTORS® (NAR), the largest obstacles to the recovery of the housing market are job creation and the availability of credit. At their board meeting last week, NAR approved a credit polity to urge the mortgage lending industry to “reassess and amend their policies so more qualified home buyers can become home owners.”
Larence Yun, the Chief Economist for NAR, said “currently, the overly tight underwriting standards are holding back the pace of housing market recovery.” “In particular, creditworthy small business owners and those who want to purchase investor properties have encountered extreme difficulties in obtaining a mortgage. In contrast, all indications are that recently originated mortgages with Fannie Mae, Freddie Mac, and the Federal Housing Administration have solid loan performance, implying that credit is only going to the most well-qualified borrowers. Additional creditworthy borrowers who are willing to stay well within budget and meet reasonable underwriting criteria should be able to obtain a loan to help speed the housing and economic recovery.”
Yun goes on to point out the obvious, “to qualify for a loan, most buyers also must be gainfully employed” and, as Congress reconvenes to consider an extension of the Bush tax cuts, points out their decision could impact job creation.
Yun says if the Bush tax credits are extended for those earning less than $250,000, he expects about 1.5 million new jobs to be added to the economy in 2011 helping home sales rise (new and existing combined) to 5.5 million in 2011 from 5.1 million in 2010. If the credits were extended across the board he says you can kick up the home sales for 2011 by another 60,000 – 80,000 homes. Hmm….I think I’m liking this tax credit extension idea :)
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