A continued heavy supply of homes on the market has brought home purchases almost to a standstill, despite low housing prices and low interest rates, say some industry pundits. Meanwhile, a declining clan of buyers are faced with unemployment, tight mortgage restrictions and the expiration of the tax credit. "The market, right now, is a veritable case study of the law of supply and demand," according to a recent report from real estate data provider Altos Research. "Right now, there's a whole lot of supply, but very, very little demand. The buyers that drove a flurry of activity during the spring have left a deafening silence in their wake."
According to its 10-city composite index, there were 311,742 houses in inventory in July, up 2.2 percent from the previous month and up 3.8 percent over the last three. It seems that people who are shopping for a home just aren't buying fast enough to deplete inventory at the rate in which sellers are putting homes on the market.
Thomas Meyer, CEO of J.I. Kislak Mortgage, believes that the housing market right now is bumping along the bottom with bargain hunters and "traditional buyers" such as new families, and move-up buyers needing a bigger house.
"High unemployment has certainly had a dampening effect, but that runs up against the psychological orientation that now is the time to get a deal, [given] low housing prices coupled with low interest rates," he told HousingWatch. "Unfortunately, many shoppers are running into the very restrictive and conservative underwriting orientation today and can't qualify for a mortgage loan."
