Job Woes Kept Buyers Away from Mortgages, Homes in June

The prospect of getting laid off has home shoppers wary of committing to a mortgage, and those that do want to buy a home are continuing to find it hard to get financing, according to a monthly survey of real estate agents by Credit Suisse.

Those attitudes made investors more active participants in the purchase market, using cash to snap up low-priced homes, even in markets with scarce inventory, wrote lead analyst Daniel Oppenheim.

“On the other hand, we saw the traditional owner-occupant buyers step back, as they have become even more concerned about the economy, and are hesitant to make a purchase given their concerns about employment,” he wrote. “We think the lack of confidence in employment is a key issue, especially when coupled with the worry that a home bought today might sell for less in three-six months.”

The survey’s traffic index declined for the fourth straight month and at 28.8, is down 13.2 points since reaching what was a nine–month peak reading of 42 in February. A reading below 50 indicates traffic levels were below surveyed agents’ expectations.

The survey’s price index was 29.1 in June, up from 27.4 in May, but still below what had been an 11-month peak of 32.6 in April.

Agents cited financing issues among the deterrents for shoppers. “Even buyers who qualify for mortgages want to wait a month or two,” an agent in Austin, Texas reported.

Historically low mortgage rates—averaging 4.6% in this week’s Freddie Mac rate survey—may have lost some of the luster with buyers.

“Values continue to decline. People are uncertain about pricing and are holding out even though they know mortgage rates are historically low right now,” an agent in Minneapolis said.

Job woes have other agents reporting that consumers are wary of taking on a mortgage. The economy added 18,000 jobs in June, the lowest increase since September.

“People are once again hearing about people who are losing their jobs,” said an agent in the New York/Northern New Jersey market. “They don’t want to have the burden of a brand new mortgage while they think they could lose their job next week!”

An agent in the Philadelphia/Southern New Jersey market concurred. “Buyers either can’t obtain a mortgage or they don’t want one because the time isn’t right.”

Credit Suisse said markets with significant foreclosure volumes—like Las Vegas, Miami and Phoenix—saw strong traffic from investors. But the markets with lower real estate owned inventory, like the Texas markets of Austin, Dallas and Houston saw weak activity, as did the Charlotte, Chicago, New York and Washington, D.C. markets.