Tight Credit Strangling Columbia SC Home Sales

Columbia SC home sales are being squeezed by tight credit standards. No factor, including negative equity, lack of consumer confidence, and a shaky economy, have been as devastating to the housing industry as the inability of buyers to get financing.

Even though mortgage rates continue hovering at record lows and home prices seem to have bottomed out in markets across the nation, only 46 percent of consumers applying for a mortgage to buy a home are successful. On the bright side, that’s an improvement over the 39 percent of mortgage applicants in March who were able to obtain a mortgage.

Today’s tighter standards are making it tough on move up buyers, who are also sellers, who get behind on their mortgages as well as first-time buyers. Currently, some 3.6 million homeowners today are 30 days or more delinquent on their loans.

Risk of default is declining as the pool of mortgages written after tighter standards were imposed in 2007 grows. In the past two years, delinquent payments by homeowners have declined markedly.

The ten to twenty million homeowners who have allowed themselves to become delinquent may find it impossible to qualify for a new mortgage should they choose to take advantage of today’s affordable prices and rates.

Add the 10 million plus homeowners who have been recently delinquent to the number of homeowners who have fallen underwater on their mortgages — owing more than their homes are worth – now at 11.1 million. Large numbers of these 21 or more million homeowners are potential sellers who could ease the demand for middle and lower tier inventory and could increase demand for move up homes. Together these two groups account for 40 percent of the nation’s 53 million homeowners with a mortgage and 27 percent of all homes.

When you consider all these factors, it’s no wonder why Columbia SC home sales are being strangled.