Last one out of the mortgage business, please turn off the lights!
On August 31, 2007, ACC Capital Holdings announced that it was closing Ameriquest (Argent Mortgage was the wholesale division) by no longer taking loans and selling its loan servicing unit to Citigroup.
Does this mean on September 1st 2009 all of the 2/28 (2 year fixed) loans will have been weeded out of various loan servicing portfolios?
If it does, we will have to wait until September 1st 2010 for the 3/27 (3 year fixed) loans!
The middle of 2007 was when we saw just about every mortgage wholesaler shut down their operations. Some went out of business and some shut down their mortgage wholesale division. If you consider that the majority of the current foreclosures being sold right now are the end result of some of these loans then it would be simple to say that once we pass this period of fixed loans we should see some improvements to the real estate market.
What is the difference with this market compared to markets of the past? When this market turns the availability of financing will never likely reach the levels we have recently experienced. Let’s say that we start to see considerable improvements in the early part of 2010 that would mean that we still have another 1.5 years of a rather gloomy real estate market from today.
My feeling is that the market will slowly start to improve once we work through this cycle of mortgage loans. Even when this happens it will take time and there is no telling what other negative economic factors will come into play such as inflation, the war and the overall condition of the economy. There are so many factors that will play into this real estate recovery.
I hope that you aren’t expecting a quick recovery to this real estate market. The reality is that it’s going to continue for another couple years.
August 5th, 2008 at 3:03 am
What you are saying seems to be the consensus of many experts. I am just a bit sad that my in-laws didn’t listen to me and bought a place for my sister in law in San Diego last year anyway. Now that place’s comparables are 25% to 50% below the price they paid and my sister in law lost her job. It’s a pretty sad situation.
August 5th, 2008 at 7:05 am
Nice summary of what’s going and what will happen to the real estate market. The fact is that the price comes down not the sale. the main cause of sale is foreclosure.
August 5th, 2008 at 12:05 pm
Hi!
Congratulations for the content of your site! I find many things I was looking for.
I’ll indicate it for some economists I know.
See ya
Jul
August 7th, 2008 at 1:51 am
The market will slowly go up, so prices will also go up.
August 7th, 2008 at 8:05 pm
The real estate market will circle back, but like you said, it may be several years before we notice.
August 11th, 2008 at 5:52 pm
i agree that the market will improve once we get through the cycle, however, that cycle is far from over. we are only seeing the beginning of the effects of the fallout. the sub par lending practices went on for far longer than a few weeks to months, and we will see the fallout for quite some time to come.
August 12th, 2008 at 9:42 am
I think it is obvious that the problems are going to lastfor a couple of more years but I am amazed that you as someone in real estate are being honest about that. Congratulations for your honesty!
August 13th, 2008 at 6:46 am
That crises made possible the improvement. The real estate market will come back on normal until the end of year, you’ll see.
August 13th, 2008 at 12:39 pm
True, it is the beginning but I believe a lot can change after the presidential elections this years. If you think about it, there is never really a good time to buy or sell property. What I am trying to say is that sometimes, it’s good to sell the property when the property values are high and when they are low, buying becomes easy.
August 13th, 2008 at 7:34 pm
I agree with your assessment….there is not much good you can say about the market right now, and I guess this fall was inevitable, but as you say, it will come back around eventually.
August 14th, 2008 at 2:30 am
This has come true in the UK
Data compiled by Credit Suisse shows that there were 17,300 mortgage products on the market in June 2007. Today there are just 4,000.
Last year, 100 financial institutions were vying for mortgage business. Now, almost all net new lending is provided by just five banks - Lloyds TSB, Abbey, HBOS, HSBC, Barclays and Royal Bank of Scotland.
August 15th, 2008 at 9:13 am
its true, in agree.
August 20th, 2008 at 10:39 am
I’m waiting for the spring of ‘09 for the real estate market here to make a shift. This winter is going to be prime buying and lending season in my opinion.