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Dave Stevens on understanding this housing market

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I have been in the mortgage industry since 1983 and have worked in a variety of housing markets over the past 39 years. Although my most recent position was more senior, my mind tends to think the same as when I was first his loan originator at Denver.

In fact, while serving as a member of the Federal Housing Commission and as CEO of the Federal Housing Administration, the skills I developed selling loans gave me the ability to influence industry policy leaders and others. It helped me develop. Mortgage Bankers AssociationSelling loans and influencing policy leaders is all about selling ideas and taking leadership to get others to agree.

Today, when I talk to loan originators, I am reminded of the early days of being anchored. mortgage interest rate was over 14% and there was no refinancing at all. In many ways it was similar to today, with one exception. When I started, I wasn’t spoiled for the housing market like it is in 2020 and 2021. refinancing volume Nothing like it has ever been seen in the United States.

Frankly, federal reserve It overshot the market, resulting in significant damage to the U.S. economy, especially the mortgage and housing sectors.

Consumers competed to win sales contracts and get homes at low single-digit interest rates, creating enormous demand for home purchases. As a result, home prices across the country have risen by about 34% in just two years. It has shut out many first-time homebuyers who have found themselves unable to compete with buyers willing to make unconditional offers above list price.

But to make matters worse, the Federal Reserve, along with the stimulus bills provided by Congress in response to covid, are putting an excessive amount of purchasing power (cash) in the hands of consumers.

Entire nations were caught off guard by their unpreparedness to support the enormous demand for their goods and services. Shortages in his chain of supply meant much of it was still going on, and the cost of everything from new cars to basic random lengths of lumber skyrocketed.

The country, exhausted by two years of cabin fever due to covid, began traveling literally everywhere at once. After that, airports, airlines, hotels, restaurants, etc. experienced staff shortages, rising prices and declining inventories.

For a mortgage lender, the result would be like drinking all night in college and then facing a horrible hangover the next day. This means that demand for mortgages will shrink significantly and margins will shrink. Corporate layoffs and “right size”, And concerns about what the future holds.

Many loan originators, most reliant on refinancing volumes, have awakened in 2022 when the skill set of selling mortgages via realtors or other referral partners in a rising interest rate market puts someone at 2. I realized that refinancing to a ~3% mortgage is completely different. mortgage rate.

But to all you loan originators out there, let me remind you of a few key points.

1. The housing market will not stay the same forever.

With interest rates falling in March 2020 and rising in 2022, the market will change rapidly. Glen StearnsFounder and CEO kind loana regular TikToker, was asked in one video what was the most important lesson he learned in business, and his answer was, “This one will also pass.”

Just as the Fed overreacted to stimulus, it is likely to overreact to quantitative tightening, so mortgage rates are sure to fall, probably later in the year. In fact, the MBA chief his economist predicts interest rates will be in his mid-5% range by the end of next year. things will get better.

2. You have one big advantage over anyone else in any kind of “sales” role.

Future homebuyers, even those who are now sidelined because of fear and emotion, have one key difference. I want own a house. The product has already been sold. You don’t have to convince yourself that you want to become a homeowner.

In fact, over 90% of Americans hope to one day own a home. Concerns about home prices, mortgage rates, eligibility, and more may be holding them back. But they are already sold in the product. That’s a big advantage.

3. Data is useful now.

The housing market isn’t too bad.In fact, an MBA weather As for 2023, projected volumes will make next year one of the best mortgage years of the last 20 years. In fact, 2020 or he won’t match 2021, but his mortgage purchases should be better than any of his 2002-2020 years.

And the industry has had good margins and revenues through most of these years (apart from the Great Recession). So as the industry right-sizes rapidly, margins will return and we’ll have a solid year ahead.

4. Potential home buyers want to buy.

The media and hype have scared potential homebuyers into the sidelines, but betting on a home’s value is one of the biggest bets anyone can make. Then, homebuyers flooded in, making it a seller’s market again.

Buying now means you can negotiate as a buyer. And one thing history has shown is that house prices are always going up, as the chart below on the Federal Reserve’s (FRED) site shows. Even considering his eight recessions since 1960, home prices are always recovering and rising. So trying to time the housing market is like timing Bitcoin.


There is no absolute certainty in timing. But for single-family homes in this country, the median only rises over time.

5. Strong demand is expected in the next few years.

As Chief Economist Mark Zandy, Moody’s Analyticssaid in a recent presentation that millions of Americans are approaching 34, the median age to buy their first home. The age distribution of the population should be a steady demand as millions of millennials are aging into that critical age range. In fact, this is the largest wave of an aging population heading into the home buying season that the United States has ever experienced.


The psychology of our industry—loan originators and realtors—can get very emotional when things aren’t working perfectly. But this is when true professionals double down.

Companies that engage in more consistent sales activities and bring the concept of added value (some of which are mentioned in this article) will help motivate people in this market. Practicing optimism and looking for good data to back up your efforts is essential to your success.

There are cycles in the industry, remember. The overall size of the housing market next year is historically a pretty strong market, home prices have always risen over time, demographic demand waves are simply irrefutable and of course ‘this also passed.”

David Stevens has held various positions in real estate finance, including senior vice president of Single Families at Freddie Mac, executive vice president of Wells Fargo Home Mortgage, assistant secretary to the Housing and FHA Commissioner, and CEO of the Mortgage Bankers Association. rice field.

This column does not necessarily reflect the opinions of the Editorial Board of HousingWire and its owners.

To contact the author of this article:
Dave Stevens [email protected]

To contact the editor responsible for this article:
Sarah Wheeler [email protected]

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