Mortgage Tech Demo Day

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DOJ v. NAR and the ethics of real estate commissions

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Hopes for generational investment in housing fade in DC

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Road to the one-click mortgage

This white paper will outline how leveraging a credential-based data provider can save money for lenders, reduce friction for borrowers, speed time to close, and overall bring lenders one step closer to a one-click mortgage.

Politics & Money

Deutsche Bank claims housing correction complete

Recent indicators showed housing has largely corrected back to pre-bubble levels and affordability, according to a note from Deutsche Bank analysts.

Nationally, home prices dropped roughly 40% from the overheated peak in 2006 to a low in 2009. But the analyst said in a note Thursday that prices are still 30% higher than the millennium average. Incomes, while similarly dented by the financial crisis actually recovered more quickly than prices.

With the affordability of mortgages heading in the other direction to a level not seen since 2000 – led by rates still falling to historic lows – prices look manageable once put into this perspective (see the graph below).

“The correction phase can be regarded as largely completed, and the outlook is improving,” Deutsche analysts said.

Housing starts and approvals are still at historically low levels but are up 50% from post-bubble lows. Foreclosure rates are down 30% from their highs.

But risks remain, including a still large number of homes and mortgages in the shadow inventory of distressed assets, though the backlog is on the decline. No real recovery will take hold until Congress begin to unwind government supports and decide a future role for Fannie Mae and Freddie Mac.

Deutsche analysts also warned of the upcoming fiscal cliff and the recession that would likely follow if Congress does not act to avoid such drastic spending cuts at the beginning of next year.

Affordability may not get much lower, leaving little room for improvement without loosening credit standards. The Federal Reserve announced another round of bond buying in September, but the effect on housing may be underwhelming.

“There are fears that the decline in interest rates accompanying the Fed’s intervention will barely be passed on to the end-consumer. The medium-term effect on house prices may then also be small,” according to Deutsche. “Overall, we expect at least a sideways movement and possibly also a rise in housing prices following the pronouncements made by the Fed.”

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3d rendering of a row of luxury townhouses along a street

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