Phoenix and Scottsdale home buyers and sellers know that ‘Sub-Prime‘ was the word of the year for 2007.
There is a new phrase that is sneaking into the vernacular of Maricopa County (Phoenix, Scottsdale,Fountain Hills, Mesa, Gilbert, Chandler, Tempe, Peoria, Glendale) real estate buyers and sellers.
That term is ‘credit crunch‘. Defined in the dictionary as "defined as "a severe shortage of money or credit".
In consumer terms this means a variety of the following things.
- There are simply less Phoenix area regional banks and lenders in the business who have money that you can borrow.
- The banks who are in business have less money to borrow as they have less deposits at their banks.
- The interest rates (called spreads) are higher so banks can reduce risk.
- Banks have raised acceptable credit ratings (FICO score) for borrowers
- Fees for loans have been raised as well as interest rates on credit cards, etc...
- Tighter lending standards - more income, more assets, higher credit score required
- Stated income loans, 100% financing have virtually disappeared for Phoenix home buyers
- Home Equity Lines (HELOC) and credit card limits have been frozen and reduced
Home buyers suffer as those who want to purchase homes cannot get affordable loans or financing at all. Sellers suffer as there are simply less buyers who can buy a homes as a result.
In the greater Phoenix area housing market is suffering from an overabundance of short sales and foreclosed homes.
However, until the real estate market in towns like Fountain Hills, Peoria and Glendale can recover we need to get past the credit crunch.
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Contact James Wexler (480) 221-8080 for your Phoenix AZ | Scottsdale AZ Real Estate needs
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