If you remember last month (and who doesn’t), the region celebrated a month of sales and price appreciation not seen for nearly a decade. Indeed the whole country seemed to experience the same boosted level of housing market happiness in June leaving housing prognosticators salivating over the prospect that the housing market has finally hit its stride. That may be. After all we’re coming up on the 4th straight year of year-over-year price appreciation and that’s good news.
While not exactly robust, the economy doesn’t appear to be headed for the shoals anytime soon. In spite of a staggering level of people who are not working, a lot of people have gone to work, or back to work, and that’s good too. And there may be the long-anticipated start to millennial household formation. Even if they’re just moving out of your basement and into an apartment – that’s where it starts. Another five years they’ll be having kids and wanting their own backyard with a swing. Or they’ll move back in with you after the divorce – you know your kids better than I do.
Yeah, our market was down a little in July. Sales were down about 7% from June and prices dipped about 2%. Not to worry though, sales are still 13% improved over July 2014 and prices continue to creep up with a 6% year-over-year bump. With fewer sales we did add a few more properties to inventory. In fact our unsold months of inventory jumped 11% last month. While the percentage sounds big, it only amounts to a .3% increase – from 2.5 months to 2.8 months. We’ve got a ways to go to get our market in balance at 6-7 months. And it could get even better. A coalition of Mortgage Bankers, consumer advocates and Moody’s Analytics are calling on the administration to relax some of the Dodd-Frank/CFPB/knee-jerk regulations put in place after the great meltdown. On behalf of the group, Urban Analytics has estimated that as many as 1.2 million more mortgage loans would be made annually if not for overly restrictive regulations. 1.2 million more homes built would equate to about 3.56 million jobs created a year. That’s a pretty good stimulus in and of itself.
If you can add 300,000 jobs a month to the current 280,000, you might actually be able to get the country moving again.
Of course their efforts in DC are caught in the normal intercourse of events back there with Democrats worried about letting banks off the hook and republicans concerned about the fiscal impact of these policies. There’s a lot riding on next year’s election.
Of course, having recently heard radio commercials advising homeowners to borrow against their ‘future equity’, I do appreciate the necessity of keeping some degree of oversight on the banking industry. But the banking industry can always hire pricier attorneys and they’re usually still at least a step ahead of the government boys. By the same token you can’t simply make up policies, as the CFPB has done, that keep banks so risk averse they won’t lend to any but the most highly qualified buyers. There’s a fine balance there that we don’t seem to be able to attain.
There’s also the looming threat of the TRID (TILA-RESPA Integrated Disclosure) from the CFPB. While the implementation of this program has been delayed until October (for now), most knowledgeable observers believe this marks the end of the 30 day escrow in the name of consumer protection. And we can’t forget the virtual certainty of rate hike by the Fed as early as September and which way that will move the market. Some experts think it may slow the market as fewer buyers can qualify at the higher rates. Other experts believe it will have a stimulating effect on the market as buyers who have been on the fence waiting for the bottom to hit, realize they missed it and rush the market. I agree with the experts.