Rent Sign by Chaleston's TheDigitel

Usually, when a financial crisis occurs, the housing market has great potential for economic recovery. People need new houses as they move for work, marry, have children, et cetera. Demand for houses supports new construction or reconstruction that increases employment. Money flow increases, and the economy rises again. In the US, however, the real estate market has disappointed such hopes.

Better to Rent

Harvard University’s Joint Centre for Housing Studies released a report in June showing that rental housing has strengthened over the past year much more than buying. Both the number of renters who have postponed buying waiting for better economic conditions and the number of owners who have gone back to renting have increased. Americans are more careful, and they don’t rush into buying their own house. Now, renting is cheaper and gives them time to wait for lower prices.

Record Low Rates

According to Freddie Mac, one of the US’s biggest buyers of home mortgages, mortgage rates are the lowest they’ve been in over fifty years. “Thirty-year fixed-rate mortgage averaged 4.15 per cent with an average 0.7 point for the week ending August 18, 2011,” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a release. Such great numbers should encourage homebuyers to take action. They don’t.

No Confidence, No Money

“We have no consumer confidence after what has just happened,” said LuAnn Lavine, a real-estate agent from Geneseo. “Interest rates are a record low. I should be out working 14 hours a day, and I am not.” After debt ceiling debates, the US rating downgrade, persistent concerns about the new recession US residents are worried. They even may feel that the worst is about to come so this isn’t a good time to spend money or to hold a debt. “It’s cheaper than ever to borrow, but that’s because no one wants to borrow,” says the Economists’ blogger in his commentary.

Not for Everyone

Underwriting requirements have become tighter — much tighter. They say that mortgages are now very cheap, but that doesn’t mean they’re widely available. Not only borrowers are careful; banks and other mortgage lenders have set difficult lending conditions. It was necessary after the mess of the US housing bubble, when almost everyone could borrow. But loans have become only a dream for the many not-well-qualified borrowers who need them most, and that‘s the problem.