Greenville Real Estate: What will turn the housing market around?

Lower mortgage rates and a lower threshold for acceptable credit scores is the key to turning around the housing market, says Ron Popp, a broker with Century 21 Advisers.  

"People recognize that there is a lot of great opportunity out there (to buy houses at prices lower than a few years ago), but they are still scared," Popp said, "because you have a lot of nay-sayers out there saying it is going to get worse."  

What would cure it? 

Lenders have to be willing to loan money to people who have less than perfect credit.  Burned by the foreclosure crisis, banks have tightened their lending standards to the degree that many creditworthy would-be borrowers are excluded, Popp said. 

The top score in the system most lenders use to evaluate risk is 850.  "In the real good times, 75% of people had somewhat damaged credit," Popp said. "If you got out of college and maybe you were late with a credit card payment, that put your score in the 600s."  Applicants in today's economy need credit scores above 700 "before they will even look at you," Popp said.  "Relatively strong people who have a little ding, banks won't even talk to them." 

The federal government "bailed out the banks and the banks aren't lending," Popp said. "We would have massive sales going on if we got (mortgage) rates in the 4s and if they got the credit scores (approved) in the 600s. The banks are holding back on those right now.  They are creating a shortage of Greenville real estate sales, but our market is so full of homes for sale, it's unbelievable." 

His prediction? 

"I think we’ve bottomed out. Three years from now, house prices "should be back where homeowners think they should be. We are going to slowly come back."

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