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Realtors Confident in Housing Despite Credit Concerns

Realtors expressed overall confidence in the market tempered by concerns regarding credit availability, according to the latest ""Realtors Confidence Index"":http://www.realtor.org/sites/default/files/realtors-confidence-index-report-2013-11.pdf from the ""National Association of Realtors (NAR)."":http://www.realtor.org/

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The survey revealed a confidence index of 59 in November, up slightly from 58 in October. A score of 50 indicates ""moderate"" market conditions, according to NAR.

Anticipated seasonal gains over the next six months led to an even higher score for the single-family home market. Realtors gave the sector an index rating of 64, up from 60 in October. However, Realtors did express concerns regarding the regulatory environment and buyers' access to credit.

Among Realtors who reported transactions in November but ultimately did not close a sale, 9 percent said the homebuyer could not obtain financing, and of those, 6 percent reported the buyer gave up on purchasing the home.

Lenders continue to require impeccable credit. More than half of survey respondents reported selling homes to buyers with credit scores of 740 and above. According to NAR, if lenders returned to ""normal"" credit expectations, as many as 500,000 additional home sales could occur.

""Market incentives are clearly there for more lending for home purchases,"" Lawrence Yun, NAR's chief economist, said. ""The one big unknown, however, is coming from Washington in terms of new mortgage regulations and of the increased lawsuit risks from any small deviation from government directives.""

Yun warned that ""too much regulation and too many lawsuits also carry the risk of lessening lending.""

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Cash sales continue to play a large role in the purchase market, according to NAR's survey. About 32 percent of residential homes sold in November were purchased with cash, the trade group found.

A majority of purchases by investors and international buyers were cash purchases, 85 percent and 70 percent, respectively, NAR reported. Among first-time homebuyers, 12 percent of sales were all-cash sales.

In addition to the large percentage of cash purchases, Realtors reported a significant percentage of home sales with substantial down payments. About 37 percent of survey respondents reported down payments of at least 20 percent, while noting that ""buyers who pay cash or put down large down payments generally win against those offering lower down payments.""

In the same vein, Realtors reported that first-time buyers ""who generally use mortgage financing are finding it hard to compete against investors who typically pay cash.""

About 1.8 percent of Realtors sold a home to a foreign buyer in November. Foreign homebuyers tended to hail from Canada, China, Mexico, India, and the United Kingdom, according to NAR.

About 28 percent of Realtors sold a home to a first-time buyer in November, unchanged from October. Nineteen percent sold to an investor, while 12 percent sold to a buyer who was relocating, and 10 percent sold to a buyer purchasing a second home. Fourteen percent of agents sold a distressed home in November.

Realtors perceive that ""many baby boomers would like to downsize, but there are not enough buyers for larger homes,"" according to NAR's report.

Both the survey's buyer and seller traffic indexes increased in November. The buyer index rose from 53 to 56, while the seller index rose from 41 to 43.

However, respondents reported a rise in the number of days-on-market over the month, which NAR attributes to ""a slowdown in demand."" The median number of days-on-market for homes sold in November, according to the NAR survey, was 56. That's up from 54 days in October.

Non-distressed homes sold fastest, with a median number of days-on-market of 55. Foreclosed properties spent 59 days-on-market. Short sales sat on the market for 120 days, up from 93 in October.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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