Lenders Loosen Their Purse Strings

Lenders Loosen Their Purse Strings

NEW YORK (MainStreet) — What's the key to a healthy housing market? Simple: a big supply of willing buyers matched by a big supply of willing sellers. Plus generous, easy-going lenders.

Lenders, though still kind of stingy, are loosening the purse strings a bit, and those buyers and sellers are getting more enthusiastic by the month, according to a survey by Fannie Mae.

"The share of respondents who say now is a good time to sell a home reached a record high of 40%, compared to 30% in April and 16% one year ago," Fannie Mae reports. "At the same time, the share of those who say it is a good time to buy a home moved up 5 percentage points from April to a survey high of 76%."

While attitudes are improving among buyers and sellers, the higher number for buyers is probably due to today's still-low home prices. Buyers are excited about bargains; sellers are merely relieved home prices are no longer falling.

The survey also found that 55% of respondents believe prices will rise over the next few months, a high for the 3-year-old poll. Only 7% expected prices to fall over that period, a survey low.

But respondents did not expect big price gains, believing average prices will rise a modest 3.4%. That's the lowest estimate since last September, and it's around the long-term average for annual gains in home values.

In some parts of the country, prices have jumped at double-digit levels over the past year. A key reason was the low number of homes for sale. Many homeowners could not sell because, after the price plunge of recent years, they could not get enough to pay off their mortgage. Others didn't want to sell because they felt prices were too low, or because they worried they could not get a mortgage for a new home. The sluggish job market meant fewer homeowners had to move.

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