There Is One Crucial Obstacle To The Housing Recovery
Housing analysts have been turning extremely bullish and a few expect home prices to rise 8 percent this year.
Paul Diggle at Capital Economics is one of them. But the housing recovery still has some hurdles it needs to clear.
"Capacity constraints in lenders’ mortgage departments are one of the few remaining bottlenecks in the housing recovery and one of the factors contributing to the marginal role being played by mortgage- dependent buyers," he writes.
While some people focus on the slow rise in residential construction employment, Diggle pays more attention to the slow pace of job growth in the real estate credit sector.
Between 2005 - 2009, employment in the real estate credit sector fell by 45 percent, while mortgage applications fell 75 percent. Since then however, mortgage applications have "almost doubled", according to Diggle, while job growth in the real estate credit sector has only increased by seven percent. Read the full story at www.businessinsider.com.