NAR survey shows challenges

Recently the National Association of Realtors conducted an agent survey and released the results last week. As with any national news story, we need to look at it from our own, local perspective on the concerns revealed in that survey.

Under the headline, "5 Market Problems Scaring Realtors," The Daily Real Estate News released the following list on Thursday;

1) Unrealistic buyers: "The market has slowed," the report notes. "In particular, buyers are reported as resistant to higher prices, are more demanding, extremely cautious, and looking for properties in perfect condition. In many cases, buyers are approaching sellers' markets as if they were buyers' markets, offering unrealistic and unobtainable prices."

This is just a portion of the text on this topic but leads us to ask, "When haven't buyers wanted something for less than the asking price?" Although with the bulk of our sales occurring for less than $200,000 (less than the national average) we see a lot of competition, most buyers are first going to offer less than the asking price, which is usually countered and they end up paying more if their initial offer is too low. "Lowball" offers are nothing new and they are not likely to go away.

2) Limited inventories: Tight supplies of for-sale homes relative to demand is also a persistent problem haunting the market, providing buyers with fewer options, Realtors reported. Inventory is showing signs of improvement (particularly in states like California, Florida, Ohio, Hawaii and Utah), but supply remains tight, the report notes.

As of the end of June, our local housing inventory was 9.9 percent higher than at the same time last year. This does not mean that there is a surplus of inventory in all price ranges. As indicated above, there is a lot of competition for homes valued at $200,000 or less. That competition would imply that there are only so many homes in that price range, or that there are only so many of the type the majority wants to buy.

3) Appraisals: "Appraisals have again shown up as a major issue," the report notes. "In particular, there was concern that current appraisals do not reflect changing and improving market conditions. Appraised values were reported as coming in too low. In addition, there was major concern in some cases about the lack of knowledge of local conditions by the appraisers."

This may be a problem nationally, or at least for the 50,000 agents surveyed, but locally we are seeing appraisals come in at or above the sales price fairly consistently. With the new rules affecting appraisers in recent years causing some initial panic and the lack of recent sales during the recession, there was a period when it was difficult to get a property to appraise at its selling price. Things have settled down, appraisers have become accustomed to the new regulations and are glad to have plenty of recent comparable sales from which to base their opinions.

4) Tight credit standards: About 15 percent of Realtors reported having clients who could not obtain financing, the survey showed. Realtors noted that even the most creditworthy borrowers faced a challenging credit environment. Many Realtors reported that the underwriting and income verification process in applying for a mortgage had become "too long." Also, "the recent price recovery amid the slow pace of income and job growth has made it more difficult for some buyers to access mortgage financing."

Again, this may be true in some markets and is certainly true for some buyers. In our area, with a plethora of locally controlled lenders, we are seeing far fewer people turned down for financing. It is in part, the responsibility of real estate agents to know what their buyers qualify for before leading them to properties that exceed their ability to buy. If the buyer has already qualified and they make an offer on a home within their range, there should be no failure to get financing as long as their income remains stable and they have not run up their credit line by buying large ticket items in anticipation of moving. As for the length of processing time, we seem to be back to normal with shorter funding times for qualified buyers.

5) Regulatory problems: Realtors report that Federal Housing Administration and Veterans Affairs loans also are leading to a loss in closings. Realtors reported that flood insurance is hindering deals, too. "Even though premium increases have been to some degree ameliorated, the reclassification of flood plains has been a problem and, in some cases, is seen as inaccurate or inappropriate," the survey states. Additionally, Realtors mentioned that the debt ratios outlined in Dodd Frank are too stringent for a growing number of clients and are "preventing sales from going through for creditworthy clients."

Certainly, just as they have for appraisers, new regulations present challenges to lenders when qualifying borrowers. The FHA requirement of mortgage insurance has definitely affected the purchasing power of some buyers, just like unsubsidized flood insurance premiums and will raise the monthly cost of a home. These additional fees will compel the buyer to seek a lower priced home if they are to afford it, but if they get qualified in advance of their search, a good Realtor will only show them homes they can qualify for even with the new requirements. As seen nationally, there may be fewer starter homes but home ownership need not be out of reach if you have done your homework.

Trust an expert...call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.