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Is it a lending crisis, an affordability crisis, or a housing crisis? Maybe it is all three.
Homeownership rates have declined and everyone is clamoring for lenders to do more to help provide financing to more perspective home buyers.
A basic rule of economics is supply vs. demand. What if the problem is that there just aren’t enough homes for sale to meet homebuyer demand?
Since the problems of 2008, the mortgage lending industry once again reinvented itself, learning to lend under a new set of rules and regulations promulgated under Dodd-Frank.
The industry has done so quite well, albeit kicking and screaming, while incurring quite a bit of additional costs. But, we’re still standing.
Regardless of the lending programs offered or the credit standards used, the problem we now face is that there aren’t enough homes available on the market to satisfy the needs of all those wishing to buy.
Lenders have introduced new low down payment loan programs with eased credit standards to service more low to moderate income and first-time homebuyers. But, these consumers are having a tough time finding adequate housing they can afford.
Because of refinancing, and an increase in home values, many existing homeowners are staying put, keeping these homes off the market.
A recent study done by ATTOM Data Solutions, a multi-sourced national property data warehouse, found that today most homeowners remain in their home for almost 8 years, compared to only 4 years a decade ago.
Compounding the problem is that with more consumers looking to rent, many of the starter homes normally purchased by first-time buyers are now being scooped up by Investors for rental housing. This further depletes the available housing stock for the first time and low to moderate income home buyers.
Lenders need to be aware of this current phenomenon and offer whatever products and services are needed to finance homebuyers at all levels. With fewer homes for sale, the competition will be fierce for these buyers.
Quality, compliance and customer service are key elements of any successful lender. How will you compete in this market?
Now, it’s a matter of having enough homes for the reinvented lenders to finance.
