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As is usually the case, there are two sides to a story (sometimes three). Yesterday, we heard about a potential increase in home buyers resulting from renters jumping into the market.
Today, we get the other side of the story. Builder confidence is at its lowest levels in quite some time as low rates and an improving economy are not triggering the anticipated housing recovery (Confidence).
On the up side, builders still believe things will start picking up in the spring buying season having been tempered somewhat by a bitter cold winter, supply shortages, and tighter lending rules. On the other hand, those in the market for housing seem to show a preference for the purchase of existing homes or single family rentals. Throw in the possibility of the Fed raising interest rates, which could have a potential positive, or negative, effect on home buying. And the plot thickens.
What does it all mean? I think it means we’ll have a little more of the same. Lending in 2015 and 2016 may not set any records for highs or lows. It will be somewhere in the middle, a little better than the past few years, but not as good as pre-2007.
If rates rise, some sitting on the sidelines may jump into the market before they get too high; others will stay away because of perceived affordability issues. On the other hand, if rates do not rise we may see increased refi activity and some renters moving into homeownership as they believe the time will be right. The Millennials remain the wild card. What will they do? That’s another story
Lenders can sit around listening to all these stories, ending up with paralysis by analysis. Or, get out there and do what they do best; lend. Regardless of rates, renters, rumors, or record there will be consumers at every level looking for a place to live and raise a family. The pool of those looking for loans may be slightly smaller but they are out there just the same. The goal is to be prepared to service them when the opportunity arises. Have the systems, services, and products in place, with well-trained staff, to attract the business and close the deals.
Do you have the full story? Do you believe everything you read?
Do you have the luck of the Irish? Happy St. Patty’s Day (now that’s a story). Have fun, but be careful.
