Realtor confidence in current and future market conditions took a slight dip in June as several challenges continued to pose a threat to their businesses and the housing recovery, according to the latest Realtors Confidence Index.
In the survey of 50,000 real estate practitioners, the following problems were cited as the most common causes of loss of sales:
1. Unrealistic buyers: "The market has slowed," the report noted. "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." About 12 percent of those surveyed who did not close a sale in June said that the buyer and seller could not agree on the price, and 10 percent reported that the buyer lost the bidding competition.
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. Given the demand-supply imbalance, home prices generally continued to increase, and properties were on the market for fewer days for the sixth straight month. Properties averaged 44 days on the market in June, compared to 47 days in May.
3. Appraisals: Appraisals have again shown up as a major issue, the report revealed. 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.
4. Tight credit standards: About 15 percent of those surveyed reported having clients who could not obtain financing. Even the most creditworthy borrowers faced a challenging credit environment, the report noted.
5. Regulatory problems: Respondents said that Federal Housing Administration and Veterans Affairs loans also are leading to fewer closings. Also, 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."