As a counterpoint to my recent article about prices falling in the Westchester real estate market in 2014, I recently spoke to a colleague, Dan Shlufman, Managing Director ofClassic Mortgage, LLC, who gave me a rather upbeat view of where he sees the local mortgage market going in the next few years.
Dan agreed with me that the real estate market in 2014, while better than the prior two years, was not an especially strong year as the market was hampered by stricter lending guidelines. "The good news is that interest rates didn't rise like many pundits predicted and are now actually at their low point for the year," Dan said. Based on his experience as a mortgage banker and practicing real estate attorney, Dan said these are the trends that he sees developing:
1. Millennials will finally start to buy houses. Many of them have been hampered by the inability to save, instability in the job market, and fear they developed from seeing their parents affected by the great recession. Now that they are a little older; the economy has strengthened; and they are forming families, they are ready to be drivers of the real estate market. What's different is that the Millennials are making housing choices which are not the same as those made by their parents. They want to live right around major cities or in the cities where the jobs are. As they are marrying and having children later, they are looking for areas where there are bars, restaurants and entertainment options within walking distance. These areas typically have higher housing prices.
2. The housing market will get stronger in 2015. Consumers are feeling better about themselves, their jobs, and their prospects, which will be reflected in the prices and the inventory.
3. Foreclosures are at their lowest level in years and will continue to drop. Banks are also starting to take the position that a foreclosure or short sale on your record is not a deal breaker. Only recently, if you had a foreclosure or short sale you wouldn't have been able to buy another house for up to seven years. Today, the "look back" is down to about two years, or even one year under special circumstances.
4. New Immigration Policies are potentially a huge game changer. There are about five million people who at some point in 2015 will be allowed to stay permanently in the U.S. Once they have documentation, millions of "new" buyers are going to look to take part in the American dream of homeownership. These immigrants are hard-working people who have jobs (and which will become documented ones once these policies take effect); save their money; and often live in multi-family, multi-generational households. As a result, banks will find a way to lend to them. They will generally be buying the starter homes, (i.e. in the $200-400k depending on the market). This will enable the current owners of these homes to move up to the middle of the market, (i.e. those homes in the $400-700k). This part of the market is exactly what has become "stuck" over the past five or six years in the Westchester area.
5. Many of the major banks have "overlays" which are stricter credit requirements than those actually required by Fannie Mae, Freddie Mac, and the FHA. If you have been denied a mortgage by a major bank or were given a loan with unfavorable terms, independent mortgage bankers like Classic Mortgage have products available from banks and investors who have more generous guidelines and can work with you to get you a much better mortgage solution.
The foundation of Dan's approach and mine is that people who are interested in purchasing a home and who don't have the best credit or a huge down payment, should not be turned off by all the media reports about outlandish prices and impossible-to-get-mortgages. Not many people realize that Dan can offer a mortgage to someone with 3.5% down and with a credit score as low as 580.
Come in and talk to me and a mortgage specialist, like Dan, so we can help you understand the market, and crunch some numbers on current prices and mortgage options. You may be pleasantly surprised.
Call the Mark Boyland Team at (914) 234-4444 and contact Daniel Shlufman at (917) 575-6977 or e-mail him email@example.com.