January 2017 - The World's Local Bank

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 56 of 67

TH E M R EP O RT | 55 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA when they've got a lot of things to worry about," Rhodes said. "When they're finally ready, we have to get them up to speed as quickly as possible. Maybe what's required is that we begin to develop a consistent educational message. That's something that could be done more broadly by the industry as a whole." Of the millennials surveyed, nearly one-third (30 percent) said they don't know how much they can afford when it comes to a mortgage and one-quarter said they don't understand the long- term financial impact of purchas - ing a home. Half of millennials said that concerns over student debt had delayed major financial decisions, according to the survey. Despite the magnitude of the decision of buying a home, the survey found that consumers often spend more time prepar - ing to make much less impactful decisions such as buying a TV or planning a vacation. Half of re- spondents said they spent "consid- erable time" planning a vacation compared to just 29 percent for a mortgage. More respondents said they were more likely to spend considerable time shopping for a TV than a mortgage (32 percent compared to 29 percent). "I recently bought a TV, and I spent a lot of time wonder - ing about every frame, refresh rates, and resolution, and I'm in the mortgage business, and I thought, 'Maybe I don't spend as much time as I do buying a TV,'" Rhodes said. "Consumers aren't orienting around the thing that they need to, which is this is a re - ally big deal, and we need to help them understand what they're committing to. This sounds weird, but you have a relationship with your TV—the size, the pic - ture, the sound. You have a some- what intimate relationship with the television. We have promoted ourselves as so transactional that people don't see the relationship to be had. That's a really missing element in our industry and in an area where there needs to be a real focus—this is as important as a relationship as someone has with their TV." Millennials, Baby Boomers to Dominate Housing Market Millennials are showing particular affinity for affordable markets in the Midwest. A mong the trends that is predicting for the housing market in 2017 are that millen - nials, which have been cited by many analysts as the key to housing growth, will dominate the market along with baby boomers and that millennials' market share will be higher in Midwestern cities than the national average. In fact,'s 2017 National Housing Forecast esti- mates that millennials and boomers will fuel demand in the housing market over the next decade, and not just for 2017. While they predict millennial market share of the total buyer pool will fall slightly to 33 percent, mostly due to rising inter- est rates, millennials and boomers are still predicted to dominate the market. The forecast from Realtor. com calls for boomers to comprise about 30 percent of the buyer pool next year. The affordability of Midwestern markets is expected to continue to attract millennials at a higher rate than the national average in 2017, even with interest rates rising. In 2016, millennials made up 42 percent of buyers in the Midwest, compared to the national average of 38 percent. reports strong affordability in 15 of the 19 largest Midwestern markets, including Madison, Wisconsin; Columbus, Ohio; Omaha, Nebraska; Des Moines, Iowa; and Minneapolis. Based on price appreciation and sales gains, predicts that the top 10 housing markets overall in 2017 will be: 1. Phoenix-Mesa-Scottsdale, Arizona 2. Los Angeles-Long Beach- Anaheim, California 3. Boston-Cambridge-Newton, Massachusetts-New Hampshire 4. Sacramento-Roseville-Arden- Arcade, California 5. Riverside-San Bernardino- Ontario, California 6. Jacksonville, Florida 7. Orlando-Kissimmee-Sanford, Florida 8. Raleigh, North Carolina 9. Tucson, Arizona 10. Portland-Vancouver-Hillsboro, Oregon-Washington The forecast for these 10 mar- kets is an average price apprecia- tion of 5.8 percent (beating the anticipated national average of 3.9 percent) and sales growth of 6.3 percent (higher than the predicted national average of 1.9 percent), according to While many have speculated as to what effect the new Trump Administration will have on the mortgage industry, Realtor. com Chief Economist Jonathan Smoke said he does not expect the election's outcome to directly affect the economy or the health of the housing market for the rest of 2016. One thing is certain, how - ever—Freddie Mac reported that immediately after the election, the average 30-year FRM experi- enced its largest weekly increase in three-and-a-half years and is now above 4 percent for the first time in a year. The main reasons for the increased rates favoring buyers, according to— anticipation of more wage growth and economic improvements in the coming year. "The 40 basis points increase in rates in the days following the election has caused us to increase our interest rate prediction for next year (up to 4.5 percent)," Smoke said. "With more than 95 percent of first-time homebuy - ers dependent on financing their home purchase, and a majority of first-time buyers reporting one or more financial challenges, the uptick we've already seen may price some first-timers out of the market." "With more than 95 percent of first-time homebuyers dependent on financing their home purchase, and a majority of first- time buyers reporting one or more financial challenges, the uptick we've already seen may price some first-timers out of the market." —Jonathan Smoke, Chief Economist,

Articles in this issue

Archives of this issue

view archives of TheMReport - January 2017 - The World's Local Bank