I hear a lot from mortgage bankers, real estate agents and international investors. Mostly they ask about the outlook for U.S. real estate next year and beyond. The good news is that the recovery in home prices seen in much of the U.S. is real and, we believe, sustainable. The general disappearance of any discount for distressed, bank-owned properties (real estate owned) is one very real sign that the worst days of the financial crisis since 2008 are largely behind us.

But we are far from finished building a strong foundation for a full recovery in housing markets, especially home finance.

When you talk to real estate agents, brokers and property managers around the country, they are fearful about a number of things. First and foremost, like many Americans, they worry that unemployment is still too high. This is a concern because we need stable home ownership to support current housing valuations and because a strong job market is a precondition for creating the new families and households to buy homes.
The second issue, related to jobs, is housing inventory. A great deal of the support for the uptick in home prices over the past 24 months is due to a shortage of supply. This comes as a result of the fact that many homeowners are still sufficiently underwater that selling is difficult or impossible. So they don’t bother listing their homes.

Agents also are saying that there are a lot of “fence sitters” who are thinking about buying but want to wait and see how the market feels next year at the end of the first quarter. The spring is one of the key home buying seasons and many agents report reluctance on the part of prospective homebuyers to commit to a purchase because of uncertainty about the economy, home prices or both. The continuing political mess in Washington over the budget, healthcare and a raft of other issues does nothing to alleviate consumer fears in this regard.

A key piece of feedback I get from agents concerns the availability of credit, something about which bankers need no lectures. While it is common among economists and the media to hear people talk about higher rates affecting mortgage applications, the real causes of slumping mortgage applications are structural in our view. Millions of previous homeowners have been forced into rentals because of recent credit problems. Millions more are cut out of the mortgage market because of legal and regulatory changes such as the Dodd-Frank Act, which has discouraged loans outside the tight parameters of the qualified mortgage, and Basel III, which penalizes U.S. banks for making below-prime mortgage loans.

Indeed, one of the reasons that I still find a lot of uncertainty about the housing market among many real estate agents is the fact that banks are essentially limiting their mortgage lending to prime customers, borrowers with FICO scores well north of 700. Agents, like bankers, earn a living based upon the transactions that get closed. Thus you can understand the rising anxiety of many real estate brokers who can no longer depend on established relationships with commercial bankers to close mortgages.

This is music to the ears of nonbank lenders like my employer, which will go down to a 580 FICO on some loan products. But the reality is that all of the nonbanks taken together are still too small to pick up the slack as commercial banks retreat from many parts of the mortgage market. The empowerment and transparency that the web environment affords consumers is great, but consumers looking to evaluate options and make good decisions about a home purchase are still best served through the services of a professional loan officer and realty agent.

With the Mortgage Bankers Association’s refinance application index falling and the purchase index at the lowest levels since 2012, it is no surprise that there is still the perception in many markets that home prices may retreat into the winter and rates will stay low or even fall. So why buy now? The fact is that while home prices have improved and rates did rise a bit in the third quarter, buying a home is still an extremely attractive proposition in many markets, especially compared to the cost of renting.

In seeking to prevent future financial contagion, we have perhaps gone too far with regulation of the mortgage finance industry. You are already seeing proposals from the housing industry and in Congress to address these concerns. But all of us in the home lending and realty professions, including the National Association of Realtors and American Bankers Association, need to do a better job of promoting homeownership.

Steve Ozonian is the chief real estate officer for Carrington Holding Co. LLC and formerly chairman and CEO of Prudential Real Estate and CEO of Realtor.com

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