Despite favorable buying conditions that may make purchasing an expensive home appealing, home seekers purchased properties that were within their budgets in 2011, largely as a result of tight credit conditions, a new report finds.
The report, conducted by the National Association of Realtors, not only detailed borrowing activity, but what the typical profile was of a home buyer in today's market. For instance, for first-time buyers, their median income was $62,400, the property they purchased was 1,570 square feet and cost an average of $155,000. However, due to restrictive lending practices, entry-level home buying activity was less than what is typical when prices and interest rates are so low.
Paul Bishop, vice president of research for NAR, said restrictive lending practices were largely responsible.
"This [data] underscores how important it is to open the credit spigot for creditworthy buyers — banks simply need to get back into the business of lending. Higher home sales would help create jobs through related economic activity," he said.
Have a clean credit report can help consumers be approved for a mortgage, though borrowers typically have to satisfy other criteria as well, such as proof of steady employment, among other things.