Categorized | Residential

Real Estate Sales Unaffected by Low Interest Rates

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Despite record low mortgage loan interest rates, the overall volume of sales in many parts of the country continues to remain stagnant. In some regions, such as Erie County, the number of residential real estate sales has actually decreased despite the low rates.

Even with record low interest rates, Erie County has seen the number of residential property sales fall more than twenty percent in the last year and a half. Furthermore, the past six months have been the worst performing months in housing sales that Erie County has experienced in over fifty years.

While low interest rates may be attractive to first-time homebuyers, the uncertainty surrounding the economy, job market, and overall residential real estate market has led potential buyers to rethink their decision to purchase a home. In addition to the uncertainty, many homebuyers are faced with tougher lending restrictions, and a far more intensive and intrusive loan application process than had been experienced in previous years.

To eliminate the risk of loan defaults, banks have become very selective in the mortgage loan qualification process. As such, many potential homebuyers have been deterred from buying a home due to the sheer difficulty in obtaining a mortgage loan.

While residential real estate sales are down, there has been some good news in that overall prices seem to be increasing. However, sale prices still only a quarter of what they once were. Many analysts believe that the struggles experienced in Erie County, as well as other areas of the country are due to sellers failing to adjust their prices to current market demands. Instead, they continue to ask for prices that are more consistent with their 2007 performance, and thus, remain on the market without a single prospective buyer.

 

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About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

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