The housing market is finally beginning to recover, as conditions have recently combined to boost affordability to an all-time high. But at the same time, a new study shows that lenders' unwillingness to broaden qualifications may be slowing the recovery.
The latest data from the annual Harvard Joint Center for Housing Studies report shows that, in general, the U.S. real estate market is in better shape than it has been in years, as employment continues to grow and home prices have rebounded -- or at least stopped falling -- over the past few months. Sales of existing homes have been on the rise for the last 10 months, and bottomed-out prices suggest a full recovery may come over the next few years or so.
In general, people are becoming more confident in their own abilities to afford a home purchase, the report said. Home prices are down some 35 percent nationwide, interest rates are below 4 percent and have been for some time, and at the same time, renting is becoming more expensive.
Best Beach Towns for Buying Foreclosures
Lender Restrictions Could Cost Housing Recovery, Study Says
Average sale price: $355,604
Average foreclosure discount: 28.17%
The quintessential California beach town, Santa Cruz is located about 75 miles south of San Francisco. It is comfortably situated between thickly wooded mountains and clean sandy beaches. The Santa Cruz boardwalk entertains children and adults alike: It has an amusement park complete with roller coaster, arcades, mini-golf, bowling, shopping and outdoor concerts.
Average sale price: $237,405
Average foreclosure discount: 30.34%
The Town of Barnstable is comprised of several famous Cape Cod villages, including Hyannis. It's also close to the islands of Martha's Vineyard and Nantucket. Hyannis has a large natural harbor and is the largest recreational boating port on Cape Cod. The Kennedy Compound is also located in Barnstable, in the village of Hyannis Port.
Average sale price: $345,799
Average foreclosure discount: 30.56%
Honolulu, Hawaii's capital located on the island of Oahu, offers top quality surfing, famous Waikiki Beach and pristine hiking trails. It also has an exemplary public transportation system, which connects its world class shops and restaurants to its relaxing beaches.
Average sale price: $161,819
Average foreclosure discount: 30.38%
Since Las Vegas isn't on the beach, your best bet for being able to gamble and ride waves is Atlantic City, N.J. Besides its familiar street names (see: Monopoly), the city has a world famous boardwalk lined with casinos, shops, restaurants and an amusement park.
Average sale price: $274,077
Average foreclosure discount: 38.80%
After a long day enjoying the sunny beaches or hiking in majestic mountains, spend the night tasting some of the finest California wines in Santa Barbara's wine country. The city also has a temperate climate year-round, so it is a great place to live if you want to avoid snowy winters and scorching summers.
Average sale price: $156,148
Average foreclosure discount: 40.43%
Marco Island has miles of white-sand beaches and beautiful year-round weather. Naples, just north of Marco Island, also offers white sand beaches and has world class golf courses and exciting outdoor activities. Naples is also close to Everglades National Park.
Average sale price: $78,851
Average foreclosure discount: 44.38%
Texas has beaches, too! Miles of the Gulf of Mexico shoreline extend across Corpus Christi, where there are plenty of sites and attractions. Visit the U.S.S. Lexington Museum or the Texas State Aquarium. For more outdoor adventures, check out Mustang Island State Park, where you can enjoy fishing, bonfires, kayaking and camping.
Average sale price: $93,188
Average foreclosure discount: 45.11%
Another outdoorsy paradise, Vero Beach offers -- not surprisingly -- miles of beaches and is home to the Pelican Island National Wildlife Reserve. Enjoy airboat tours, scuba diving, snorkeling and many other water and beach sports.
"Think about how careful people are moving back into the market when prices have fallen this much," Eric Belsky, the managing director of the Harvard Joint Center for Housing Studies, told National Public Radio. "You know, the opportunity to potentially buy at or near the bottom of a cycle is great. And I think people are beginning to appreciate that."
But one thing that has been persistent in restricting the housing market's continued growth is that many mortgage lenders are still keeping financing under tight wraps for many consumers, the report said. Experts generally agree that this is an overreaction to the downturn seen in the last few years, which led to millions of people becoming delinquent and later defaulting on their home loans, and it cost banks billions. Many financial institutions are still requiring credit scores that are well above what would have been needed to qualify for a mortgage just a few years ago, and most also mandate larger down payments from those who would otherwise qualify.