July 2007 Broker Magazine, pg. 21, "Jumbos: Big Loans, Big Problems" A quote from Michael Covino in this article has been cycling in the back of my mind for three days. Maybe it will stay away if I let it out of my head. "We're not even at the halfway point for what's in store for us as lenders..."
Honestly, I'm feeling schizophrenic about the overall market right now. For a period it's, Dang the torpedoes, you have no control so full enthusiasm ahead; another it's a more worried concern for what's next.
Here's a torpedo, again from Covino, same page, "...but the mortgage marketplace is not in a recession. It's in a depression." Now, from what I have been able to quickly Google and Wiki, a depression is basically a long recession or decline, more than two consecutive quarters.
Out of curiosity, I went to the MBA site and checked their Market Environment page, tallying up the decrease/increase weekly reports back to Nov. of 06. There were 21 decreases, 20 increases and 1 unchanged. The quarterlies went like this:
Q3 06, down 6% from Q3 05 - remains strong overall
Q4 06, up 3% from Q4 05
Q1 07, down from Q4 06 - remains strong overall
Q2 07 wasn't on the site yet.
Curiouser and curiouser. I navigated to the Freddiemac site and came across this article: http://www.freddiemac.com/news/finance/outlooks/July_07_frecom_outlook.html
Scroll down to the last paragraph, Mortgage Activity:
"Mortgage activity. Fewer home sales, slower growth in home prices and rising interest rates that reduce refinance incentives all point to a lower estimate of mortgage activity. We now forecast total mortgage originations in 2007 to hit $2.75 trillion, down from our previous estimate of $2.79 trillion, representing an 8.5% decline from 2006 volume. The refinance share of mortgage originations is expected to hit 42% in 2007, the lowest level in seven years. Finally, mortgage debt outstanding, which rose an annualized 5.6% in the first quarter, is predicted to grow by 5.9% over 2007, the slowest growth rate in more than a decade."
I read that and thought, Gosh, overall we are in a depression. Now, the Seattle area is doing okay compared to actively declining markets. Doing okay, or "normal", in my seat o'pants analysis, means the tranny is in neutral, sometimes slipping into drive, trending slightly upward overall.
So, recession, depression, market cycle...greater minds will decide. Personally, in reconciling the local market with national trends, I'm netting out at just half. Regardless of volume, I still have an enthusiasm for how a mortage can be used as a financial tool to help my clients achieve their goals.