We can’t get new buyers as a nation. Historically, housing ownership is around 64%, and in the last few years, by reducing lending standards, we increased this to 69%. This extra increase of 5 points is going to be, in hindsight, an error. These people who were brought in, did not qualify before because they have low credit score, low income, unstable histories, bankrupcies, no down payment; in other wors, they are subprime borrowers who should never have qualified for any loans of any type. Let’s face it: not every American is stable enough to own a mortgage.
So anyone who could fog a mirror and wanted to buy a house, has done so.
Now, where will the new buyers come from? Who are today’s buyers anyway? Moveup buyers? Some first time buyers? The latter group is shrinking as they are most interest rate sensitive.
The buyer pool is shrinking, because we are at a record homeownership rate now, interest rates are too high for current prices, prices are too high, and people are afraid of falling prices.
A problem for sellers is that there isn’t any group left to sell homes to. People moving from other states have less money from their homes, so they don’t have enough money to put down to get a CA home.
