Opinion, commentary and analysis on everything that makes the U.S. housing economy tick -- not to mention the ghosts in the machine, too. Written by HW's team of editors and reporters each business day.
It seems everywhere you look, people are praising the housing recovery that’s swept the nation so far in 2013. And can you blame them?
New construction starts were up 24% in the first half of 2013 when compared to the first half of 2012, according to the U.S. Census Bureau. With the exclusion of foreclosures and short sales, existing home sales rose 32% year-over-year in June, the National Association of Realtors reported. Plus, the delinquency + foreclosure rate dropped 14% year-over-year in June, according to data from Lender Processing Services' First Look report.
Those numbers seem to add up to a pretty solid recovery thus far. Yet, bubble talk still abounds, rising rates are stirring buyer’s apprehension and low inventory has many buyers frustrated.
But let’s imagine for a second that we avoid the bubble, rising rates don’t derail the recovery and a rise in inventory calms hesitant buyers. Are there still risks to the housing market for the remainder of 2013?
According to Trulia ($36.08 -1.59%) Chief Economist Jed Kolko, the answer is yes.
Post-bubble, mortgage credit became tight … very tight. While recent data suggests mortgage credit may be loosening a bit for borrowers that are most creditworthy, it’s still tight. It’s hopeful that new mortgage rules that will come into effect in 2014 will clarify which loans are considered risky and how banks will be on the hook legally and financially if they make these riskier loans. And hopefully this will create a willingness from banks to write mortgages deemed to be safer.
Millennials need to get up and out of their parents’ homes for this recovery to come full circle. Not only are Generation Y members not buying homes, they’re not even renting.
Shadow inventory is still significant, with the Census’ 2013 Q2 vacancy survey reporting that 5.6% of all housing units are vacant and off the market. This is up from 5.1% in 2009. Let’s hope owners decide prices rose enough to unload this hidden inventory.
With the Consumer Financial Protection Bureau’s qualified mortgage rules and the Fed’s bond-buying tapering in the first half, Washington will inevitably play a huge role in what happens in the second half of 2013.
However, according to Kolko, two bigger, messier housing "hot potatoes" are still being thrown around: the mortgage interest deduction, and the future of Fannie Mae and Freddie Mac.
"Banks, Millennials, the new shadow inventory, and Washington: they’ll all help shape which direction the housing market will go in the rest of 2013 and beyond," writes Kolko.
While other state and federal regulatory bodies overlap in their regulation of the mortgage industry, the very particular consumer focus of the CFPB is not duplicated by any other body. Will deregulation mean a return to the Wild West lending atmosphere that led to the financial crisis? What happens next? We asked John Socknat, partner at Ballard Spahr, to weigh in on what mortgage lenders and servicers can expect from a Trump administration.
Amid the potential new direction from the White House, Congress and regulators, leadership in our industry is more important than ever. Which is why HousingWire is proud to present the 40 winners of our 2016 Vanguard award. These leaders from all segments of the mortgage ecosphere demonstrate that our industry is more than capable of meeting the challenges that lie ahead.
The marketplace is full of hard and private money lenders — it will come down to who can best assist investors in completing their goals, whether that be by providing quicker close times, or with more accurate valuations. With how many options there are for borrowers, lenders will need to start competing for marketshare as borrowers shop their situations to multiple lenders, leveraging the offers against each other. This process will force lenders to update their guidelines, or be forced out of the market.