The housing market is undergoing a “very gradual recovery” as more new households are choosing to rent over buying a home, according to economists at Wells Fargo Securities.
The Census Bureau recently reported that the
“It is hard to imagine a sustainable housing recovery taking place with fewer homeowners. This appears to be lost in all the celebration over soaring house prices and bidding wars,” according to a new monthly Housing Data Wrap-Up report released Monday.
Investors—both individual and institutional investors seeking to turn single-family homes into rentals—are largely responsible for the sharp run-up in home prices. This rise in prices has dramatically reduced the number of homeowners with negative equity.
But it has also created a new set of issues for traditional homebuyers.
Prices have outpaced appraisals in many markets, making it tougher for traditional buyers to compete with investors or cash purchases, the May 13 report says.
Tight credit also makes it difficult for traditional homebuyers.
“A full-fledged housing recovery will require a normally functioning mortgage market, which we are still nowhere close to,” the WFS report says.
