Deja Vu? 2014 Is Turning Out To Be Eerily Similar To 2007 (via www.silverdoctors.com)As you are about to see, U.S. home sales fell dramatically throughout 2007 even as the mainstream media, our politicians and Federal Reserve Chairman Ben Bernanke promised us that everything was going to be just fine and that we definitely were…
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I agree with your observations, but not the cause. Real estate professionals generally know nothing of finance. Financial regulators / Congress generally know nothing of real estate markets. Sales and originations are down because of the new rules and qualifying mortgages of Dodd Frank. The government has made it that everyone has to have the same loan, or suffer pain of government sanctions. But parts of the Country vary drastically from one area to the other. A loan over $417,000 puts you in a jumbo range, and anything over $625,000 is generally not available. There is a legal cap at $1 million. The AVERAGE FICO scores for acquisitions and refinancings are now between 710 to 733. What kind of market standard is that? Lenders are cherry-picking, and there is no pressure to MAKE loans. Rather than enabling lenders to make non-qualified loans in greater numbers, regulators are stressing the opposite. So we are left with investors being the last in the market, which necessarily limits numbers of buyers. This “stop me before I borrow again!!!” mentality of Dodd Frank is what is holding down originations (potential borrowers don’t even apply, knowing they will not qualify), IMO.