Concerns over Credit Stop Renters from Buying

Over One Half of the U.S. Renters
Live in One Family Homes


By Gene Wright

78 percent of all tenants living in one family houses believe that buying a home would make more sense than renting. Yet difficulty obtaining the financing, which includes poor credit, would stop the majority of them, (over 53 percent), from becoming homeowners, if they were actually moving. Seventy-two percent of renters in one-family homes believe it would be hard for them to acquire a home loan, with 33 percent bringing up their poor credit history as a major drawback to getting a loan.

Concerns over Credit Stop Renters from BuyingThe newest National Housing Survey by Fannie Mae shows that concerns over getting home loans and about the path the economy is taking has been steadily growing and workers have become increasingly afraid of their jobs disappearing. The results suggest that if these workers concerns come to pass, wide ranging job losses will end up with a new foreclosures wave. Of the fourth (26 percent) of U.S. workers fear losing their jobs within the next year, 44 percent state that they have a home with a mortgage. Nearly a two thirds of them (66 percent) say they do not have enough savings to weather an unemployment period. Doug Duncan, a Fannie Mae VP and chief economist says that "Consumers have become more cautious because of their concerns over household finances and employment",

As a consequence, consumer spending, which amounts to around 70 percent of our U.S. economy, came to a stop during the second quarter of 2011. Consumers are more wary over taking on added financial commitments, while a confidence setback translates into setback in any housing market recovery," Duncan said.

Thirty percent of minorities with mortgages reported being underwater compared with 22 percent of non-minorities with mortgages. Thirty-four percent of minority homeowners state they are making big financial sacrifices to own a home, compared with non-minority homeowners only at twenty percent .

Minority homeowners are more apt than non-minority home owners to reside in states with higher-than-average stages of upside down equity while more than likely to have smaller household family incomes (44 percent stated their family income did not surpass $50,000 in 2010, compared to only 23 percent among non-minority home owners).

"This Survey information makes it clear over the relationship between the demand for homes and concerns over the employment stability. Frustration over the direction the economy is headed and related fears over employment have dampened the home buying demand and slowed any recovery. People who feel owning is a smarter idea than renting forever are nonetheless continuing renting, at least until issues get better," Duncan says.

The report also says that the majority Americans believe it would not be easy for them to obtain a home loan today (52 percent), which goes up to 70 percent among tenants. Whereas 51 percent of American Generation Xers (age 35-44) believe it would be not easy for them to obtain a home loan today, this number goes up to 59 percent for Gen Yers (age 18-34). Keeping in line with past quarters, 57 percent among American Gen Y (ages 18-34) believe their personal situation is going to get better over the following year, compared to just 42 percent for Generation X (ages 35-44) while 35 percent for Baby Boomers (ages 45-64). New Article Aug 18, 2011

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