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Are Housing Headwinds Actually a Blessing?

Gains in home prices over the last year haven't provided enough lift to offset the headwinds holding the recovery down--and that's a good thing, says David Hicks, co-president of Dallas-based ""HomeVestors"":http://www.homevestors.com/.

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While reluctance from lenders, sellers, and appraisers has become something of a drag on sales and price improvements, Hicks asserts the market's slow growth has kept the country away from another housing bubble.

""At the price point of the market we generally service, typically at or below the median price, securing a fair appraisal and financing are typically the major challenges our franchisees face when selling a property,"" Hicks said. ""Since we focus on 'ugly houses' that owners are anxious to sell, we're not as affected by seller reluctance as is the general market. Everything our franchisees have for sale is selling quickly and in fact, the first quarter of the year was one of the best ever.""

However, Hicks noted that HomeVestor franchisees have reported an increase in buyer reluctance for the homes that are being put on the market. Would-be buyers seem especially reluctant in areas where prices have increased significantly, Hick says--largely because they're not certain on the stability of the market and want to avoid overpaying.

Also worth noting is the current shortage of inventory, which has boosted price points and helped to drive off the sort of speculative buying behavior that could generate a bubble. Even so, low appraisals, tough financing criteria, and buyer and seller reluctance have provided a balancing weight.

""Prices have not yet risen at the pace of demand,"" Hicks observed. ""We would have expected prices to rise higher than they actually have.""

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