The tightening of the lending criteria is hitting the lower end. That’s where the subprime loans were,” said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate. “Now you have to qualify at the full adjustable rate, and that is keeping out some of the buyers. So there are fewer buyers because of the tighter lending standards.” That not only hurts subprime borrowers, it also sets back most sellers of low- and mid-priced homes because they have far fewer buyers. As a result, they’re less able to move up to the next price level, even if they qualify for a prime loan. The California Association of Realtors data indicates that while every segment of the market has seen significant slowing, there is a greater inventory buildup of homes in the sub-$500,000 price range than in the higher-end of the market.
June 11, 2007