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48 | TH E M R EP O RT 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 Watching the Housing Warning Signs Freddie Mac recently outlined three signs of a housing bubble—and stacked up current market conditions to determine if we are headed toward a burst. F reddie Mac published an Insight blog post that details the three signs to identifying a housing bubble, and evaluates current market conditions against them. According to Freddie, the first warning sign is prices skyrocket - ing until they reach unsustainable levels. If that happens, home prices can either burst or the market can fix itself through natural means. If the latter happens, it's automatically not a bubble as Freddie Mac counts home prices bursting as the second sign. "In our view, if it doesn't burst, it wasn't a bubble," said the report. The third sign of a bubble is the presence of easy credit, which ties back to the first step, as credit leads to buying, which leads to more demand and rising prices. Now that we know the signs, the big question is if they are presenting themselves in the current market. Freddie Mac reports that house prices today currently are rising, though not quite at the same level as they did during the mid-2000s. It's still worth mentioning that the house-price-to-income (PTI) ratio in large metropolitan statistical areas in 2011 was 5 and it's 17 now. On average, there the housing supply is at 3.3 months, but that ranges from over five months in New Orleans to less than a month's in San Jose, California. There's inconsistency in demand across the nation, which means that a bubble is not on the horizon. However, while house prices today certainly are increasing, the report found that the high prices are unlikely to collapse. In part, what will keep the prices from bursting is the ongoing lack of housing inventory. Freddie Mac found that there has still been a lack of construction permits rela - tive to the population, which will keep this demand afloat. Freddie Mac also states that the last indicator of a bubble, easy credit, is not present because it is more difficult than ever to qualify for a mortgage today, and home - owners are not increasing their mortgage level. So, is a bubble on the horizon? "The short answer is 'not yet.' But the concern is understandable. The scars are still fresh from the collapse of last decade's house price bubble. And warning signs of a possible new bubble are ac - cumulating," said Freddie Mac's Chief Economist Sean Becketti. Mortgage Pros Forecast the Future Lenders One Cooperative, a subsidiary of Altisource Portfolio Solutions, polled its members' use of technology and their expectations for the market in the year ahead. T he ability to point, click, and swipe their way to a mortgage loan is all the rage today. Popu - larity aside, mortgage bankers remain circumspect about online lending, according to a recent poll conducted by Lenders One Cooperative, a subsidiary of Alti - source Portfolio Solutions, on its members' use of technology and their expectations for the market in the year ahead. The poll found of particular im - portance were shielding customers' personally identifiable information during the online mortgage origi- nations and trading processe. "Mortgage professionals today realize the need for technology to drive efficiency, reduce the cost per loan, and streamline daily tasks and interactions with customers," said Michael Kuentz, President of Lenders One. "At the same time, there is rising concern regarding privacy protection as lenders increasingly integrate tech - nology into traditional processes." Seventy-four percent said they are very concerned about guard- ing customers' personally iden- tifiable information during the mortgage originations and trad- ing processes. That said, mem- bers maintained that innovative new platforms have the potential to greatly enhance efficiency and streamline processes. In fact, 56 percent asserted that improving operational efficiencies was the most influential impetus for investing in new technologies, followed by providing a superior customer experience (26 percent). Technology is also positively affect - ing traditional mortgage processes as well, the poll discovered, with 53 percent of respondents noting that technology could be most beneficial in helping streamline workflow. Polltakers also touched on workforce training initiatives, with 42 percent noting that pro - fessional development and training was the most important step their company is taking to entice and retain employees. When weighing in on what shape the real estate market will take next year and whether it will be a buyers' or a sellers' market, the majority foresee that sell - ers will again prevail in 2018: 46 percent say it will be a modest sellers' market, and 25 believe it will be a heavy sellers' market. Which factor did respondents think will have the greatest impact on the mortgage industry's growth in 2018? Forty-seven percent said potentially higher interest rates, followed by continued increases in home values (18 percent) and innovation in banks' choices of mortgage products (17 percent). Freddie Mac reports that house prices today currently are rising, though not quite at the same level as they did during the mid-2000s.

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