Four stories in last Friday’s Realtor Magazine Online news feed provided a somewhat schizophrenic view of the housing industry. The first reported that The national Association of Home Builders says that 23 major markets across the US showed improvements improvement in housing permits, employment, and housing prices over the last six months. Great News!
The second story reported that fixed, 30-year mortgage rates are now below 4% - the lowest that they’ve been in years. More good news for housing, right?
Story three however reported that fully 30% of all mortgage apps are being turned down these days. The last story reported (to no one’s surprise) that homeownership is sinking fast and is on a downward pace not seen since the great depression.
Of course, when one reads the stories one finds that housing improvements are taking place in some areas that have had near-death experiences. And even though the rates are low, mortgages are being rejected for reasons such as bad credit or no job – reasons that were not sufficient to reject mortgages just a short while ago. And as for home ownership, the story reports that young unemployed people are the least likely to own a home – well duh!
Home ownership hit its peak at about 70% during the Clinton and Bush years when home ownership programs by both of those Presidents encouraged the lending behavior that eventually led to the housing bubble and the bust. It is now down to 65.1% and falling fast, according to the latest census information.
The biggest issue right now seems to be the falling and/or low inventory in many areas, due in large part to so many current home mortgages being underwater. We are a long way from a balanced market, but not just due to tighter credit. The same would-be sellers who can’t afford to put their homes on the market used to be our move-up buyers or they are the boomers that we expected to be selling, so they could downsize in retirement.
Now those would-be sellers are stuck and even those with real stories of hardship are finding the road to short sales blocked by incompetent and understaffed lenders who are incapable of making simple selling decisions. Adding to the confusion is the back-end mess created by the pooling and selling of mortgages to investors, which could take decades to clear up or get off the books.
So are things good bad or just ugly right now. I’d vote for ugly. It’s a great time to buy a house, if you have a down payment and can get a mortgage and if there is something on the market that you might like. Those are big ifs right now. It’s actually also a good time to sell a house (due to the low inventory) if you aren’t underwater on it. Don’t even think about waiting until next year to see if the lost value will magically come back – it ain’t gonna happen. AS Dr. Phil might say to would be sellers, “It’s time to get real.”
And what about Realtors® in this market? I listen to them at social gatherings telling prospective clients that things are great, that they’ve never been busier. That’s true. Most Realtors in this area are working their tails off, many selling more homes than they’ve ever sold… and making less money at it that they ever made. It’s a schizophrenic business to be in and we’re all lovin’ it and hating it or both.