August 2012 posted numbers for existing home sales that surpassed 9% increases from this time last year! Chief economist of the National Association of Realtors, Lawrence Yun said, “The Florida market is experiencing inventory shortages, which are placing pressure on prices.” This shortage of real estate inventory could lead to other advantageous recovery factors like new construction projects, which in turn stimulates the market with job growth.
Lending conditions also play a significant role in the way the market continues to shake out. Yun also noted that at least a half million more homes could be sold in the coming year if the tight credit standards that exist today are modified. The time it takes to process a real estate loan application is far too long and the documents borrowers are required to show is considered excessive in the eyes of many realtors. Last month alone, 53% of loans went to borrowers with credit scores above 740. Last year the 12 month default rate was at 0.4% compared to 2007 when it was closer to 3%.
Shelf life, inventory, and recent home sale trends combined with loosening these tight restrictions and guidelines would all stimulate job growth in the related trade and service industry. All of these factors play a key role in how and who is influenced the most by these changes and trends in the real estate market.
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